2022 Annual Report
20
22
ar
s
t
h
g
i
l
i
h
g
h
2
2
0
2
n
o
i
t
i
n
g
o
c
e
r
&
s
d
r
a
w
A
Performance
$26.8B
in orders
11%
increase in
adjusted EBITDA*
$1.1B
in free cash flow*
Technology and innovation
$556M
in research and
development
Responsibility
AA
ESG rating
by MSCI
>2,200
patents granted
$400+M
in New Energy
orders
23%
reduction in
Scope 1 & 2 GHG
emissions**
217
HSE Perfect
Days
About Baker Hughes
~55,000
employees
$21.2B
in revenue
120+
countries where we
conduct business
Baker Hughes has been recognized by our industry and leading sustainability organizations
for our leadership. Aligned to our strategy and commitment to strong financial returns, these
achievements are a further reflection of our progress as an energy technology company and as
a top employer in many of the communities where we conduct business:
#1
top ranked company
by Institutional
Investor magazine
* Adjusted EBITDA and free cash flow are non-GAAP measures. Please refer to the Baker Hughes Reconciliation
of GAAP to non-GAAP Financial Measures section at the end of this Annual Report.
2022 Annual Report
2022 Annual Report
** 2021 actual compared to 2019 base year.
Lorenzo Simonelli
Chairman, President, and Chief Executive Officer
Dear fellow
shareholders,
2022 was a year of progress for the strategic
transformation of Baker Hughes as we continue to focus
on building a differentiated energy technology company.
With our integrated portfolio of energy solutions plus
new technology and digital offerings that serve a
wider industrial and New Energy base, we are uniquely
positioned to capitalize on oil and gas commodity
tailwinds, as well as the accelerating momentum and
structural growth of the energy transition.
During the year, we navigated a complex energy market
and macro environment, improved performance in
the second half of the year, and took meaningful steps
toward simplifying our organization to ultimately deliver
more long-term value to our shareholders and achieve
our purpose of taking energy forward.
The macro environment
Baker Hughes worked to navigate the lingering
pandemic-based supply chain volatility throughout
the year, as well as new inflationary pressures and
other impacts triggered by the geopolitics surrounding
Russia’s invasion of Ukraine. We made the strategic
decision to exit our Russia operations in 2022, which
included the sale of our Russian oilfield services business
to local management — a resolution we believe was
the responsible financial and operational move for the
Company, as well as for the safety and integrity of our
impacted employees.
In the near term, we remain constructive on the outlook
for oil and gas, and we believe underlying fundamentals
remain supportive of a multi-year upturn in global
upstream spending. With years of under-investment now
amplified by recent geopolitical factors, global spare
capacity for oil and gas has deteriorated and will likely
require years of investment growth to meet forecasted
demand. We also believe that the U.S. Inflation Reduction
Act, upcoming legislation in Europe, and investments
in the Middle East will support significant growth in New
Energy in 2023 and beyond.
Recent world events have re-focused the world’s
policymakers on better balancing the energy trilemma
— a three-way push-pull of energy security, sustainability,
and affordability. The heightened focus on energy
security and affordability is driving near-term capital
spending in oil and gas production. At the same time,
the continued focus on solving climate change and
Environmental, Social, and Governance (ESG) leadership
creates an attractive environment for investment in
energy-sustainability solutions.
To balance the energy trilemma over the longer term, we
believe natural gas and LNG will continue to play pivotal
roles in the energy mix, requiring significant investment
in these areas. We also believe the new policy directions
seen in 2022 will continue to solidify over the next five to
ten years, helping to spur significant increases in New
Energy development.
Baker Hughes is in a prime position to benefit from
this evolving landscape without compromising on our
net-zero emissions ambitions or our purpose to deliver
cleaner, safer, and more efficient energy. Our unique
portfolio of assets, energy transition technologies, and
long-term strategy has allowed us to maintain a strong
balance sheet and invest in differentiated technologies
while we transform our operations to better deliver for
our customers and enhance shareholder value.
Our 2022 performance
I remain proud of our team’s resilience and adaptability
to ensure that Baker Hughes achieved strong results
during another year of volatility while restructuring our
operations to benefit our customers and shareholders.
In 2022, Baker Hughes grew orders, revenues and
margins compared to 2021. We booked $26.8 billion
in orders, increased adjusted EBITDA* by 11%, and
continued generating strong free cash flow* of $1.1
billion.
Beginning in the fourth quarter of 2022, we
re-segmented the Company into two business
segments, Oilfield Services & Equipment (OFSE) and
Industrial & Energy Technology (IET), as detailed later
in this letter. Full-year results are stated using the new
segment structure.
OFSE — composed of our former Oilfield Services (OFS)
and Oilfield Equipment (OFE) segments — continued to
benefit from the upturn in global upstream spending
in 2022, and the segment’s strong geographic diversity
supported growth across multiple regions. Since the
merger in 2017, OFSE has substantially narrowed the
EBITDA margin rate* gap with our closest peers, and in
2022, the business continued to do so by improving
its commercial intensity, internal processes, and
operating efficiency.
Chemicals. OFSE’s EBITDA margin rate reached 17.1%
in the fourth quarter, reflecting a strong track record
of execution and growth for the Well Construction and
Production Solutions product lines, including our
drilling portfolio.
While we were pleased with the operational and
financial progress of OFSE in 2022, there is more work to
do in raising EBITDA margin rates by improving the cost
structure for the Subsea & Surface Pressure Systems
(SSPS) product line (previously known as Oilfield
Equipment), as well as improving efficiencies and right-
sizing operations in underperforming regions.
IET, composed of our former Turbomachinery & Process
Solutions (TPS) and Digital Solutions (DS) segments,
saw attractive growth in 2022, primarily driven by
the continuously favorable LNG cycle and emerging
New Energy markets, including hydrogen and carbon
capture, utilization and storage (CCUS). IET achieved
record orders in 2022, and the business segment’s
broad industrial portfolio continued to benefit from
our Climate Technology Solutions and Industrial Asset
Management organizations, which span IET’s product
lines and utilize core technologies from the portfolio to
offer end-to-end solutions for New Energy and digital
opportunities.
In OFSE, we are pleased with the margin performance
improvement in 2022. Over the course of the year,
the segment has benefitted from a shift in favor of
international and offshore markets while supply chain
constraints continue to ease for product lines such as
As we enter 2023, IET has a record backlog of $25 billion
and a robust pipeline of new order opportunities in
LNG, Onshore/Offshore, and New Energy. We are well
positioned to execute on this backlog to help drive
significant revenue growth in 2023 and 2024.
* Adjusted EBITDA, free cash flow, and EBITDA margin rate are non-
GAAP measures. Please refer to the Baker Hughes Reconciliation
of GAAP to non-GAAP Financial Measures section at the end of
this Annual Report.
2022 Annual Report
2022 Annual Report
Both OFSE and IET supported outstanding New Energy orders growth in 2022,
with over $400 million in orders versus 2021, representing a 50+% year-over-
year increase. Encouragingly, we began to see framework agreements and
memorandums of understanding (MOUs) from the past several years convert
into orders as customers increase investment in their energy transition journeys.
The most notable example was the Company’s collaboration with Air Products,
which was first signed in 2021 and has resulted in over $150 million in New Energy
orders in 2022.
Baker Hughes remained committed to delivering increased shareholder value
and maintaining a flexible capital allocation strategy in 2022. We returned
$1.6 billion to shareholders through dividends and share buybacks, and we
increased our dividend to $0.19 in the fourth quarter. Our strong balance sheet
and free cash flow continue to allow us to deliver strong shareholder returns
while we target tuck-in acquisitions, as well as strategic technology investments
in the future.
Accelerating our strategy
Given the dynamic macro backdrop, the Company continues to focus on
planning for the future and how to grow within a range of potential scenarios.
In 2022, we accelerated our strategy and began simplifying our structure to
better position Baker Hughes to navigate the evolving markets and capitalize
on emerging growth opportunities. In September, we announced the re-
segmentation into OFSE and IET as the first step to streamline our organization
and drive our transformation.
Through the restructuring, which took effect in the fourth quarter of 2022, we
merged multiple functions between OFS and OFE, as well as TPS and DS, driving a
more simplified and focused organizational structure and reducing duplications.
We also undertook a similar exercise at the corporate level, consolidating
functions and driving more accountability within the operating segments to
reduce corporate cost and enhance organizational vitality.
$26.8B
of orders
50+%
year-over-year increase
in New Energy orders
$1.6B
returned to shareholders
through dividends and
share buybacks
In 2022, we accelerated
our strategy and
began simplifying
our structure to better
position Baker Hughes.
We re-segmented into
OFSE and IET as the first
step to streamline our
organization and drive
our transformation.
Transforming the Company
to drive profitability & enhance
shareholder value
Changing the way we operate
Eliminating our product company structure
Creating two business segments focused on
different growth profiles
Strengthening our executive leadership team
Removing management layers
Simplifying operations to enhance profitability
Enhancing organization vitality
Streamlining our HQ model
$150+M
cost out across the enterprise
25+%
reduction in CEO direct reports
Maximizing returns while
positioning for multiple
growth scenarios
2022 Annual Report
OFE
OFS
TPS
DS
Oilfield Services &
Equipment (OFSE)
Industrial & Energy
Technology (IET)
OFSE Segment — Revenue TY 22
IET Segment — Revenue TY 22
$3.9B
Well Construction
$3.6B
Production Solutions
$3.6B
Completions, Intervention
& Measurements
$2.2B
Subsea & Surface
Pressure Systems
Gas Technology
$2.6B
Equipment
$2.4B
Services
Industrial Technology
$0.5B
Condition Monitoring
$1.0B
Inspection
$0.8B
Pumps, Valves, Gears
$0.6B
PSI & Controls
OFSE 2022 Regional Revenue Split
IET 2022 Diversified End Markets
Middle East/Asia
$4.9B
37%
North America
$3.8B
28%
$13.2B
16%
19%
Upstream O&G
17%
Renewables
1%
Other
1%
Power
5%
Industrial
12%
$7.9B
LNG/
Midstream
O&G
51%
Latin America
$2.1B
Europe/CIS/SSA
$2.5B
Downstream
O&G
13%
These changes are part of an intentional and phased approach to
achieving our long-term objectives. In addition to the immediate
benefits, we believe our re-segmentation and simplification bring
several durable advantages to maximize shareholder value.
Our restructuring should accrue
several direct operational benefits for
Baker Hughes:
• We will allow each business to better focus and adapt
to the quickly changing energy markets. OFSE and IET
have different growth profiles and market conditions,
and our structure will better support evolving
customer needs and commercializing solutions
in a more efficient manner.
• We will remove at least $150 million in costs through a
consolidation of product lines and related functions,
as well as at least a 25% reduction in our executive
management team.
• We will improve our operational flexibility and execution
under a more focused management team. Our new
structure will allow for more time and focus to areas like
supply chain, operations, and capital allocation, driving
better coordination, consistency, and governance.
These changes were part of an intentional and phased
approach to achieve our long-term objectives. In
addition to the immediate benefits, we believe our
re-segmentation and simplification bring several
durable advantages to maximize shareholder value.
First, it fully capitalizes on the benefits of our combined
size and scale. Our diversity and scale across the
energy complex allows Baker Hughes to continue
investment in New Energy areas and invest in tuck-in
acquisitions to strengthen our core competencies,
even as the most dramatic growth of the energy
transition is still several years away. This will also allow
us to pursue growth opportunities while returning
60% to 80% of our free cash flow back to shareholders
without compromising the financial strength of
Baker Hughes.
Second, the significant customer overlap between
OFSE and IET represents an important opportunity for
Baker Hughes to support our current customer base
on their own energy transition journeys. Many of our
current oil and gas customers are already seeking new
technologies and solutions in New Energy areas. Our
portfolio of compression, power generation, carbon
capture, hydrogen, condition monitoring, digital,
and cleaner power technologies combined with our
traditional oil and gas and subsurface capabilities
make us uniquely positioned to support our customers
as one Company, as well as to serve adjacent
industrial and hard-to-abate industries.
Third, we determined our legacy organizational
structure was impacting the pace of improvement
in our operational performance and returns. Our
restructuring will ensure better flexibility, enable faster
decision-making and allow each segment to deliver
solutions in almost any macro environment.
Importantly, our restructuring has not changed our
strategy. As we initially laid out in 2020, we remain firm
on our commitment to three strategic pillars: transform
the core, invest for growth, and position for New Energy
frontiers. In 2022, we continued to execute across all
three pillars:
To transform our core, we completed cost-out
initiatives and portfolio rationalization across multiple
businesses and geographies. We also grew revenue
3% while expanding margin rates by 100 basis points,
and, since 2017, we have closed or divested $1 billion of
non-core assets.
To invest for growth, we continued to use the
proceeds of our divestments for several tuck-in
acquisitions and strategic expansions to further
improve the high-growth differentiated parts of our
portfolio. Our acquisitions of AccessESP, Quest Integrity,
and BRUSH Power Generation are important examples
of this strategic pillar in action. Another example was
the opening of our new Chemicals manufacturing
center in Singapore to better serve OFSE customers
and growth in the Eastern Hemisphere.
2022 Annual Report
To position for New Energy frontiers, we
established new partnerships and made new
early-stage investments and acquisitions in
2022, including HIF Global, Mosaic Materials, NET
Power, and GreenFire Energy. Our momentum in
New Energy orders is growing, and 2022 marked
our largest volume booked to date ($400+
million). This is not only a positive financial
marker for Baker Hughes; it is also a positive
sign of our leadership in driving industry-wide
emissions reductions and partnering to combat
climate change.
As part of our transformation, we made several
leadership changes to ensure Baker Hughes
is best positioned to capitalize on long-term
growth. These changes will not only help to bring
external perspectives to Baker Hughes but will
sharpen our focus on execution and growth
across our portfolio.
Our entire team continues to reflect our core
values — grow, collaborate, lead, and care — as
well as our continued belief that unique ideas
and perspectives fuel innovation, and our
differences make us stronger. They continue to
embody our inclusive and welcoming culture
where innovation can thrive. I believe their
experiences are well-suited to drive our portfolio
of world-class technologies and services toward
new growth horizons.
Investing for Growth: Tuck-In Acquisitions
As a critical component of our company strategy,
strategic acquisitions for both OFSE and IET in 2022 have
helped solidify Baker Hughes’ differentiated positioning
and enrich our customer offerings in energy and
industrial markets.
As a technology leader in the alternatively deployed
electrical submersible pump (ESP) market for OFSE,
Access ESP complements Baker Hughes’ Production
Solutions portfolio and helps customers cut intervention
costs, maximize well productivity, and enhance
reservoir recovery rates. Without requiring a rig or the
well-production tubing to be pulled, the GoRigless ESP
System cuts workover downtime by more than 80%
versus traditional ESP replacement, creating a truly
differentiated solution for customers.
With the unique capability to inspect unpiggable lines,
Quest Integrity is a global leader in asset integrity and
reliability management solutions. This acquisition boosts
Baker Hughes’ asset integrity solutions for “difficult to
inspect” pipelines, adding capability for inspection of
furnace tubes, loading terminals, jet fuel lines, along
with other industrial markets. Combined with our
existing offerings, we expect to deliver expanded asset-
inspection solutions for the energy and industrial sectors.
BRUSH Power Generation is a highly regarded
electromechanical equipment provider and a
long-established, trusted supplier of Baker Hughes.
Integration of BRUSH enhances Baker Hughes’
electrification offering and supports strategic
commitment to provide cleaner energy solutions. Aligned
with our strategic commitment to lead in providing
decarbonization solutions for the natural gas industry
and historically hard-to-abate sectors, we will leverage
this acquisition to optimize our supply chain and expand
our scope on customer projects.
Growing Sustainably
Our commitment to our corporate responsibility
framework, sustainable business practices, and
a competitive and modern workforce was a
priority for Baker Hughes in 2022. At the end of
the second quarter, we published our Corporate
Responsibility Report, which highlighted
our progress in several key areas, including
sustainability, our people-first culture,
and governance.
We continue to view ESG performance as a key
lever to transform our Company and our industry.
Our commitments set out in previous years
remain firm, and our ESG strategy remains guided
by our three pillars: People, Planet and Principles.
People
To solve for the energy trilemma and lead in
the energy transition, we know our workforce
must be globally skilled, diverse, and engaged.
In 2022, we expanded our efforts to embed
diversity, equity, and inclusion (DEI) into our
operating processes for both employees and
suppliers. We further improved our talent
acquisition processes, strengthened our
employee resource groups, and increased
our outreach to diverse organizations with an
increase in charitable giving to DEI causes
compared to 2021.
We also worked to make our community
outreach programs more strategic in and
inclusive of the areas our employees live and
work. We increased our charitable giving in
the areas of environment, education and
opportunity, and health and safety in multiple
regions, including disaster relief for wildfires
in Europe.
Our human capital strategy remains a core part
of having a fair and equitable energy transition,
and our people have an important role to play
in driving the transition in the communities
where we operate. You can read more in the
Human Capital section of the 10-K.
*2021 actual compared to 2019 base year.
Planet
We had another year of great progress on
improving our environmental performance and
mobilizing our workforce to reduce greenhouse
gas emissions toward our goal of net-zero
emissions by 2050. In 2022, we reported a 23%
reduction in our Scope 1 and 2 greenhouse gas
emissions*, an increase in the use of renewable
energy, and progress on many of our other
environmental priorities.
We also continued to externally engage with key
environmental and sustainability stakeholders,
ensuring we have a strong voice in policy
formation, commercial opportunities, and
regulatory advancements. For the first time ever,
Baker Hughes attended the U.N. Climate Change
Conference (COP27) to foster direct dialogue with
governments and develop a further ecosystem
of partnerships, commercial opportunities, and
sustainability programs.
Principles
Safety, health, integrity, compliance, and human
rights are foundational elements of our culture.
We continue to be guided by our core values to
grow, collaborate, lead, and care, combined with
our strong governance model. I remain proud
that Baker Hughes employees act with integrity
throughout our workplace, striving to maintain
ethical supply chains and promoting respect for
fundamental human rights globally.
We continue to make occupational safety,
health, and emergency management top
priorities in Baker Hughes, with many of the
lessons learned throughout the COVID-19
pandemic now permanently embedded within
our work. Our ESG and financial performance
were recognized throughout 2022, with
numerous awards given to Baker Hughes for
our initiatives. Our next corporate responsibility
report will be published in the second quarter
of 2023.
2022 Annual Report 2023 will be the year to solidify
our transformation and prove our
strategic roadmap is well laid out
for long-term growth.
Delivering Differentiated Value
Baker Hughes is committed to being a differentiated
energy technology company, playing a leading role in
solving the energy trilemma and enabling the energy
transition. We believe our differentiation will continue
to be in our leadership through technology, digital,
sustainability, and commercial capabilities, allowing us
to offer an unmatched portfolio of solutions to energy
and industrial customers.
that both rewards our shareholders through best-in-
class free cash flow and capital returns. It is clear to me
our strategy is helping to deliver a sustainable future for
people and the planet, and we are doing so in a fiscally
and socially responsible manner.
I look ahead with confidence to another year of taking
energy forward.
2023 is the year to solidify our transformation for long-
term growth. We will be hyper-focused on improving
operational performance, and we will directly manage
remaining headwinds. At the same time, we will continue
to capitalize on the current multi-year upstream
spending cycle, the next wave of LNG investment, and
the growing demand for sustainability and low-carbon
solutions to support the energy transition.
We are heavily committed to creating shareholder
value. We will continue to evaluate our portfolio and
invest in New Energy and industrial technologies in a
disciplined fashion to position Baker Hughes for a future
Sincerely,
Lorenzo Simonelli
Chairman, President, and Chief Executive Officer
Our leadership
Lorenzo Simonelli
Chairman, President,
and Chief Executive Officer
Board of directors
W. Geoffrey
Beattie
Lead Director
Gregory D.
Brenneman
Cynthia B.
Carroll
Nelda J.
Connors
Michael
Dumais
Lynn L.
Elsenhans
John G.
Rice
Mohsen
M. Sohi
Management team
Nancy
Buese
Chief Financial Officer
Maria Claudia
Borras
Executive Vice
President, Oilfield
Services & Equipment
Ganesh
Ramaswamy
Executive Vice
President, Industrial &
Energy Technology
Jeff
Fleece
Chief Information
Officer
Deanna
Jones
Executive Vice
President, People,
Communications &
Transformation
Regina
Bynote Jones
Chief Legal Officer
Jim
Apostolides
Senior Vice President,
Enterprise Operational
Excellence
2022 Annual Report UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
Commission file number 1-38143
Baker Hughes Company
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
81-4403168
(I.R.S. Employer Identification No.)
17021 Aldine Westfield Road
Houston, Texas
(Address of principal executive offices)
77073-5101
(Zip Code)
Registrant's telephone number, including area code: (713) 439-8600
Title of each class
Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol
Name of each exchange on which registered
Class A Common Stock, $0.0001 Par Value per Share
BKR
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer" "smaller reporting company" and
"emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
☑
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D- 1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of the last business day of the
registrant’s most recently completed second fiscal quarter (based on the closing price on June 30, 2022 reported by the Nasdaq Stock Market
LLC) was approximately $26,299,951,662.
As of February 6, 2023, the registrant had outstanding 1,011,217,705 shares of Class A Common Stock, $0.0001 par value per share.
Portions of Registrant's Definitive Proxy Statement for the 2023 Annual Meeting of Stockholders are incorporated by reference into Part III of this
Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Baker Hughes Company
Table of Contents
Part I
Page No.
Item 1.
Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
Part II
Item 5.
Item 6.
Item 7.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Management's Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income (Loss)
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Financial Position
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
Part IV
Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
Baker Hughes Company 2022 Form 10-K | i
1
14
25
26
26
26
27
28
29
46
48
48
49
52
53
54
55
56
57
96
96
96
96
97
97
97
98
98
99
101
102
ITEM 1. BUSINESS
PART I
Baker Hughes Company ("Baker Hughes", "the Company", "we", "us", or "our") is an energy technology
company with a diversified portfolio of technologies and services that span the energy and industrial value chain.
Built on a century of experience and conducting business in over 120 countries, our innovative technologies and
services are taking energy forward. The Company was formed in July 2017 from the combination between Baker
Hughes Incorporated ("BHI") and the oil and gas business ("GE O&G") of General Electric Company ("GE"). As a
result of the combination, substantially all of the business of GE O&G and of BHI was transferred to a subsidiary of
the Company, Baker Hughes Holdings LLC ("BHH LLC"). BHH LLC is a Securities and Exchange Commission
("SEC") registrant with separate filing requirements with the SEC.
OUR VISION & STRATEGY
With the breadth of our portfolio, leading technology, and unique partnership models, we are positioned to
deliver outcome-based solutions across the energy and industrial markets. By integrating health, safety &
environment ("HSE") into everything we do, we protect our people, our customers, and the environment.
The oil and gas macroeconomic environment continues to be dynamic. We believe the world’s reliance on
hydrocarbons will not disappear, and oil and gas will continue to remain relevant in meeting global energy demand.
At the same time, the transition to new energy sources is accelerating, with governments and society focused on a
long-term goal of net-zero emissions while trying to balance the “energy trilemma” - energy security, sustainability,
and affordability - for at least the foreseeable future. We believe the industry is going through a transformation that
requires a change in how we work. Irrespective of commodity prices, our customers are focused on reducing both
capital and operating expenditures. Our existing and new customers expect new partnership and commercial
models and new technology solutions to deliver sustainable productivity improvements and leverage economies of
scale, with a lower carbon footprint. That is why our strategy is focused on improving our core competitiveness and
delivering higher-productivity solutions today, while positioning to lead the energy transition while solving the energy
trilemma.
Our strategy is based on three key pillars:
•
•
•
Transform the core: We are transforming our current business to improve margins and cash flow, which
we are achieving through portfolio rationalization, cost improvements, and new business models.
Invest for growth: We are driving organic and inorganic growth in high potential segments where we have
a strong position, including industrial power and processes, industrial asset management, non-metallics,
and chemicals.
Position for new energy frontiers: We are making strategic investments to drive lower carbon emissions
in the energy and industrial sectors, including hydrogen, geothermal, carbon capture, utilization and storage
("CCUS"), and clean power solutions.
We expect to benefit from our strategy in the following ways:
•
•
Scope and scale: We have a global presence and a broad, diversified portfolio. Our products, services,
and expertise serve the upstream, midstream/liquefied natural gas ("LNG") and downstream sectors of the
oil and gas industry, as well as broader chemical and industrial segments. We deliver through our two
operating segments: Oilfield Services & Equipment ("OFSE") and Industrial & Energy Technology ("IET") as
discussed below under "Products and Services," and each are among the top four providers for the majority
of the product lines in the markets they serve.
Technology: Our culture is built on a heritage of innovation and invention in research and development,
with complementary capabilities. Technology remains a differentiator for us, and a key enabler to drive the
efficiency and productivity gains our customers need. We also have a range of technologies that support
our customers' efforts to reduce their carbon footprint. We remain committed to investing in our products
and services to maintain our leadership position across our offerings, including $556 million research and
development spend and being granted more than 2,200 patents worldwide in 2022. We also made several
Baker Hughes Company 2022 Form 10-K | 1
•
•
strategic acquisitions to strengthen our core technology portfolio, including AccessESP, the BRUSH Power
Generation business, Qi2 Elements, and Quest Integrity.
Energy transition solutions: We are positioned to support our customers' efforts to reduce their carbon
footprint with a range of emissions-reduction products and services, which we refer to as "new energy."
This includes more efficient power generation and compression technology that reduces carbon emissions,
including CCUS, as well as hydrogen technologies. We also have a range of inspection and sensor
technologies that can monitor and help reduce flaring and emissions. In 2022, we made strategic
investments and acquisitions in emerging energy technologies to advance CCUS, hydrogen, net-zero
power and e-fuels with companies such as Mosaic, HIF, NET Power, and Levidian, among others. We also
continue to expand our low to zero-carbon solutions capabilities, helping customers to detect, quantify, and
reduce emissions more efficiently and accurately, and complementing our existing solutions available today.
Digital capabilities: We expect to benefit from the emerging demand for artificial intelligence ("AI") based
solutions as part of our customers’ digital transformation initiatives. Launched in 2019, our partnership with
C3.ai, Inc. ("C3 AI") continues to enable us to deliver AI that is faster, easier, and more scalable to drive
outcomes for our customers. In addition, we are delivering existing technology and collaborating on new AI
applications specific for oil and gas customers. In addition to enhancing our technology portfolio with new
AI applications, we are creating a digital element in our core OFSE product lines, helping them to deliver
efficiency, predictability, and a better experience for our customers and ourselves. We have also continued
to invest in our industrial asset management capabilities in IET, including the acquisition of ARMS Reliability
and an investment in Augury, a machine health technology company, to support our customers’ digital
transformation programs across industrial end markets.
In September 2022, we announced a restructuring and reorganization effective October 1, 2022, to create two
operating segments focused on different growth profiles and designed to simplify our operations and enhance
profitability. These two operating segments are Oilfield Services & Equipment, which integrates our previous
segments Oilfield Services and Oilfield Equipment, and Industrial & Energy Technology, which integrates our
previous segments Turbomachinery & Process Solutions and Digital Solutions.
PRODUCTS AND SERVICES
Our two operating segments are organized based on the nature of our markets and customers and consist of
similar products and services and growth profiles. We sell to our customers through direct and indirect channels.
Our primary sales channel is through our direct sales force, which has a strong regional focus with local teams close
to the customer, who are able to draw support from centers of excellence in each of our major product lines. Our
products and services are sold in highly competitive markets and the competitive environment varies by product
line. See discussion below by segment.
Oilfield Services & Equipment
The OFSE segment designs and manufactures products and provides related services for onshore and offshore
oilfield operations across the lifecycle of an asset, ranging from exploration, appraisal, and development to
production, rejuvenation, and decommissioning.
The OFSE segment is organized into four product lines.
• Well Construction focuses on drilling and includes drilling services (directional drilling, logging-while-
drilling, surface logging, and remote operations), drill bits (polycrystalline, roller cone, hybrid, and in-bit
sensing), and drilling & completions fluids (emulsion-based fluids, water-based fluids, specialty fluids, drill-in
fluids, waste management, and completion fluids).
•
Completions, Intervention, & Measurements encompasses completions (wellbore construction, upper
and lower completions, unconventional multistage completions, intelligent production systems, workover
systems, and fishing and through-tubing services), pressure pumping (cementing, production enhancement,
and coiled tubing and tubular running services), and wireline services (openhole logging services, cased-
hole logging services, and perforating and drill stem-testing services).
Baker Hughes Company 2022 Form 10-K | 2
•
•
Production Solutions spans artificial lift systems (electrical submersible pumping systems, surface
pumping systems, rigless deployment systems, and sensors and gauges) and oilfield & industrial chemicals
(upstream chemicals, downstream chemicals, and Aquaness wholesale chemicals).
Subsea & Surface Pressure Systems includes subsea projects and services (subsea trees, controls,
manifolds, wellheads, premium casing connectors, installation and commissioning, repairs and
maintenance, well intervention, life-of-field solutions, and plug and abandonment), flexible pipe systems
(subsea risers, subsea flowlines and jumpers, onshore reinforced thermoplastic pipe, and rehabilitation),
and surface pressure control systems (surface trees and wellheads).
These product lines are supported by an OFSE digital group, which joins the segment’s domain expertise with a
deep understanding of digital technology to improve operational safety, performance, and sustainability. Reservoir
analysis proficiencies are rooted in evaluation technologies, a team of reservoir experts, and software. Together,
these capabilities provide customers with a greater understanding of the subsurface, enabling smoother, faster
drilling and precise wellbore placement that can lead to improved recovery and project economics. OFSE also
provides integrated well services and solutions to plan and execute projects ranging from well construction and
production through well abandonment, in addition to integrated services and solutions for the subsea environment.
OFSE customers include large integrated major and super-major oil and natural gas companies; U.S. and
international independent oil and natural gas companies; national or state-owned oil companies; engineering,
procurement, and construction contractors; geothermal companies; and other oilfield service companies.
OFSE believes that its principal competitive differentiators in the industries and markets it serves are the quality,
efficiency, reliability, and availability of its products and services. A continued commitment to service delivery, HSE
standards, technical proficiency, and competitive pricing is also a key factor in its success.
OFSE products and services are sold in highly competitive markets, and revenue and earnings are affected by
changes in commodity prices; fluctuations in levels of drilling, workover and completion activity in major markets;
general economic conditions; foreign currency exchange fluctuations; and governmental regulations. While OFSE
may have contracts that include multiple well projects and that may extend over a period ranging from two to four
years, its services and products are generally provided on a well-by-well basis. Most contracts cover pricing of the
products and services, along with various limitations on liability, but do not necessarily establish an obligation to use
OFSE products and services. OFSE competitors include SLB and Halliburton (Well Construction; Completions,
Intervention, & Measurements; Production Solutions; Subsea & Surface Pressure Systems); ChampionX
(Production Solutions); and TechnipFMC, Aker Solutions, and NOV (Subsea & Surface Pressure Systems).
Industrial & Energy Technology
The IET segment combines a broad array of domain expertise, technologies, and services for industrial and
energy customers including on-and offshore, LNG, pipeline and gas storage, refining, petrochemical, distributed
gas, flow and process control, and industrial segments such as nuclear, aviation, automotive, marine, food and
beverage, mining, cement and utilities. Our solutions unlock the ability to transform, transfer, and transport energy
efficiently, while capturing and cutting emissions, solving a fundamental challenge behind the energy transition:
reducing environmental impact, while maximizing efficiency, productivity, and reliability.
IET is organized into six product lines - Gas Technology Equipment and Gas Technology Services, collectively
referred to as Gas Technology, and Condition Monitoring, Inspection, Pumps Valves & Gears, and PSI & Controls,
collectively referred to as Industrial Technology.
Gas Technology is organized into two product lines:
• Gas Technology Equipment designs, manufactures, tests, and installs gas technology solutions that serve
the entire gas value chain including offshore, onshore and unconventional, pipeline, LNG, gas storage, and
gas distribution. The Gas Technology portfolio includes equipment for mechanical-drive, compression, and
power-generation applications. Products include drivers, driven equipment, flow control, and turnkey
solutions. Drivers are comprised of aero-derivative gas turbines, heavy-duty gas turbines, small- to
medium-sized industrial gas turbines, steam turbines, electric motors, and turboexpanders. Driven
equipment consists of generators and reciprocating, centrifugal, integrated zero emission compressors. As
Baker Hughes Company 2022 Form 10-K | 3
part of its turnkey solutions, Gas Technology Equipment offers power generation and gas compression
modules, waste heat/energy/pressure recovery, energy storage, modularized small and large liquefaction
plants, CO2 compression, and storage/use solutions. The portfolio is complemented by solutions designed
for chemical, petrochemical, and refinery applications. To meet today’s industry challenges, its proprietary
laboratories experiment with new materials, facilitate the adoption of additive manufacturing, and provide
combustion and compression innovations by leveraging the most advance mechanical, chemical, and digital
techniques.
• Gas Technology Services provides advanced solutions to maintain, repair and innovate the installed
Baker Hughes fleet of rotating equipment. It also offers genuine spare parts, specialized field service
engineers, and repair capabilities to keep equipment at peak level. As an Original Equipment Manufacturer
(OEM), Gas Technology Services is able to optimize customers’ maintenance strategy and costs, and
upgrade equipment to maximize efficiency and reliability, reduce emissions, and extend the life of
equipment as well as that of the entire operating plant. Through an outcome-based service approach, Gas
Technology Services optimizes plant profitability and operations. These capabilities are complemented by
the Baker Hughes iCenter which provides a digital collaborative environment to support customer operators
with Baker Hughes’ engineering know-how, transforming assets into data driven equipment and connecting
them to ensure the highest performance throughout the entire life-cycle of the asset. In addition, the
proprietary analytics monitored and analyzed by the Baker Hughes iCenter, automatically process incoming
data to predict, detect, prevent deviations and enhance asset performance.
Industrial Technology is organized into four product lines:
•
•
•
•
Condition Monitoring includes the Bently Nevada® and System 1® product brands, providing rack-based
vibration monitoring equipment and sensors for both power generation and oil and gas operations, as well
as industrial applications. The product line also provides integrated asset performance management
offering through its acquisition of ARMS Reliability and its investment and alliance with Augury.
Inspection includes the Waygate Technologies product brand of non-destructive testing technology,
software, and services, including industrial radiography, ultrasonic sensors, testing machines and gauges,
NDT film, and remote visual inspection. The Inspection product line also includes the Process & Pipeline
Services business ("PPS") which provides pre-commissioning and maintenance services to improve
throughput and asset integrity for process facilities and pipelines, as well as inline inspection solutions to
support pipeline integrity.
Pumps, Valves and Gears consists of four valve brands, Masoneilan, Consolidated, Becker, Mooney, and
digital valve applications that provide durable control and pressure relief safety and reliability in various
industrial and critical applications; two gear brands, Lufkin Gears and Allen Gears, that offer high-
performance gearing and gear coupling solutions and services for power transmission; and centrifugal and
vertical pumps and pump technologies for complex material and demanding pressure requirements. These
products have applications in oil and gas, LNG, power generation, critical infrastructure, industrial
manufacturing, chemical processing, mining, shipping, and nuclear industries.
Precision Sensors & Instrumentation (PSI) & Controls includes the Panametrics®, Druck®, and Reuter-
Stokes® product brands, which provide instrumentation and sensor-based technologies to better detect and
analyze pressure, flow, gas, moisture, radiation, and related conditions. PSI & Controls serve a broad
range of industries from oil and gas to aviation, automotive, and nuclear.
In 2022, we created the Climate Technology Solutions (“CTS”) and Industrial Asset Management (“IAM”)
organizations which are now part of the IET segment. We believe the creation of these two groups will help
accelerate the speed of commercial development across the IET product lines for solutions-based business models
throughout our new energy and industrial asset management offerings.
CTS spans carbon capture, utilization and storage, hydrogen, clean power, and emissions management
capabilities to enable energy operators as well as the broader industry, in particular the hard-to-abate sectors, to
achieve a reliable, net-zero energy system. CTS is the primary driver of the Company’s new energy orders.
Baker Hughes Company 2022 Form 10-K | 4
IAM combines sophisticated hardware technologies with enterprise-class software as a service (SaaS) products
and analytics to connect industrial assets, providing customers with the data, safety and security needed to optimize
operations reliably and efficiently. IAM provides customers the technical capabilities to drive enterprise-wide digital
transformation of business processes and to focus on better production outcomes along the energy and industrial
processes value chain, using sensors, software as a service solutions and inspection services to connect industrial
assets to the industrial internet.
IET customers for Gas Technology product lines are upstream, midstream, and downstream, onshore, and
offshore, and small to large scale. Midstream and downstream customers include LNG plants, pipelines, storage
facilities, refineries, and a wide range of industrial and engineering, procurement and construction (“EPC”)
companies. Products and services for the Industrial Technology product lines are primarily sold in a diversified,
fragmented arena to a broad range of customers.
IET believes that its principal competitive factors in the industries and markets it serves are product range
coverage, product technology, efficiency, product reliability and quality, availability, project execution and service
capabilities, emissions, and price. IET differentiates itself from competitors with its expertise in technology and
project management, local presence, and partnerships, to provide fully integrated equipment and services solutions
with state-of-art technology from design and manufacture through to operations.
IET competes across a wide range of industries, including oil and gas, power generation, aerospace, and light
and heavy industrials. IET competitors for Gas Technology – Equipment product line includes Siemens Energy,
Solar (a Caterpillar company), MAN Energy Solutions, and Mitsubishi Heavy Industries. Our Gas Technology –
Services product line competes with independent service providers such as Masaood John Brown, EthosEnergy,
Sulzer, MTU, Chromalloy, and Siemens Energy. IET competitors for the pumps, gears and valves product line,
include Emerson, Flowserve, Metso Outotec, Sulzer, and IMI. Competitors for the remaining IET product lines
include Emerson, Honeywell Process Solutions, Olympus, Schneider Electric, and ABB.
CONTRACTS
We conduct our business under various types of contracts in the upstream, midstream, and downstream
segments, including fixed-fee or turnkey contracts, transactional agreements for products and services, and long-
term aftermarket service agreements.
We enjoy stable relationships with many of our customers based on long-term project contracts and master
service agreements. Several of those contracts require us to commit to a fixed price based on the customer’s
technical specifications with little or no relief available due to changes in circumstances. In some cases, failure to
deliver products or perform services within contractual commitments may lead to liquidated damages claims. We
seek to mitigate these exposures through close collaboration with our customers.
We strive to negotiate the terms of our customer contracts consistent with what we consider to be industry best
practices. Our customers typically indemnify us for certain claims arising from: the injury or death of their
employees and often their contractors; the loss of or damage to their facility and equipment, and often that of their
contractors; pollution originating from their equipment or facility; and all liabilities related to the well and subsurface
operations, including loss or damage to the well or reservoir, loss of well control, fire, explosion, or any uncontrolled
flow of oil or gas. Conversely, we typically indemnify our customers for certain claims arising from: the injury or
death of our employees and often that of our subcontractors; the loss of or damage to our equipment; and surface
pollution originating from our equipment while under our control. Where the above indemnities do not apply or are
not consistent with industry best practices, we typically provide a capped indemnity for damages caused to the
customer by our negligence and include an overall limitation of liability clause. It is also our general practice to
include a limitation of liability for consequential loss, including loss of profits and loss of revenue, in all customer
contracts.
Our indemnity structure may not protect us in every case. Certain U.S. states have enacted oil and natural gas
specific anti-indemnity statutes that can void the allocation of liability agreed to in a contract. Applicable law or the
negotiated terms of a customer contract may also limit indemnity obligations in the event of gross negligence or
willful misconduct. We sometimes contract with customers that are not the end user of our products. It is our
practice to seek to obtain an indemnity from our customer for any end-user claims, but this is not always possible.
Similarly, government agencies and other third parties may make claims in respect of which we are not indemnified
Baker Hughes Company 2022 Form 10-K | 5
and for which responsibility is assessed proportionate to fault. We have an established process to review any risk
deviations from our standard contracting practices.
The Company maintains a commercial general liability insurance policy program that covers against certain
operating hazards, including product liability claims and personal injury claims, as well as certain limited
environmental pollution claims for damage to a third party or its property arising out of contact with pollution for
which the Company is liable; however, clean up and well control costs are not covered by such program. All of the
insurance policies purchased by the Company are subject to deductible and/or self-insured retention amounts for
which we are responsible for payment, specific terms, conditions, limitations, and exclusions. There can be no
assurance that the nature and amount of Company insurance will be sufficient to fully indemnify us against liabilities
related to our business.
ORDERS AND REMAINING PERFORMANCE OBLIGATIONS
Remaining performance obligations, a defined term under U.S. generally accepted accounting principles
("GAAP"), are unfilled customer orders for products and product services excluding any purchase order that
provides the customer with the ability to cancel or terminate without incurring a substantive penalty, even if the
likelihood of cancellation is remote based on historical experience. For product services, an amount is included for
the expected life of the contract.
We recognized orders of $26.8 billion, $21.7 billion and $20.7 billion in 2022, 2021 and 2020, respectively. We
recognized OFSE orders of $14.1 billion, $11.8 billion, and $12.3 billion and IET orders of $12.7 billion, $9.9 billion,
and $8.4 billion in 2022, 2021 and 2020, respectively. As of December 31, 2022 and 2021, the remaining
performance obligations totaled $27.8 billion and $23.6 billion, respectively. As of December 31, 2022 and 2021,
OFSE remaining performance obligations totaled $2.6 billion and $2.0 billion, and IET remaining performance
obligations totaled $25.3 billion and $21.5 billion, respectively.
RESEARCH AND DEVELOPMENT
We engage in research and development activities directed primarily toward the development of new products,
services, technology, and other solutions, as well as the improvement of existing products, services and the design
of specialized products to meet specific customer needs. We continue to invest across both operating segments in
products to enhance safety, develop capability, improve performance, and reduce costs aligned with our operational
strategy. Through our Technology Centers we also invest heavily in fundamental technologies such as materials,
additive manufacturing, sensing, artificial intelligence/machine learning and other digital technologies such as
computer vision, data science, and edge computing.
In OFSE, we continue to fund a range of formation evaluation capabilities as well as drilling, completions, and
production hardware. Also in OFSE, the recent focus has been to expand capability into deeper water, longer
offsets and at higher pressures as well as modular designs that allow for simpler and more digitally integrated well
and field systems.
In IET, we continue to invest and develop foundational technologies which will enable our journey for the energy
transition. Such technologies include advanced materials, advanced manufacturing technologies, novel process
technologies, and digital technologies such as advanced sensing & diagnostics, data sciences, and artificial
intelligence. Within Gas Technology, we are focusing on our latest generation of gas turbines for energy efficiency
and reduced carbon footprint such as our LM9000TM and Nova LTTM products, as well as Allam Cycle
turboexpander, CCUS, and hydrogen and geothermal technologies. Within Industrial Technology, we are investing
in advanced digital solutions designed to improve the efficiency, reliability, and safety of oil and gas, aerospace,
energy, and broader industrial production and operations. This includes our Orbit 60 Bently Nevada product for
critical asset monitoring in turbine systems, including wind, hydro, and gas turbines. The IET segment is also
enhancing its process and safety valve business bringing new digital applications including analytics to our
customers. Investments in Industrial Technology also include technologies to measure, monitor, and minimize
carbon emissions, new inspection technologies for nondestructive evaluation of materials and structures as well as
solutions for industrial asset management.
Baker Hughes Company 2022 Form 10-K | 6
INTELLECTUAL PROPERTY
Our technology, brands and other intellectual property ("IP") rights are important elements of our business. We
rely on patent, trademark, copyright, and trade secret laws, as well as non-disclosure and employee invention
assignment agreements to protect our IP rights. Many patents and patent applications comprise the Baker Hughes
portfolio and are owned by us. Other patents and patent applications applicable to our products and services are
licensed to us by GE and, in some cases, third parties. In particular, we have an IP cross-license agreement with
GE that allows both parties to have continued and permanent rights to commercially utilize certain IP of the other
pursuant to the terms of the agreement. The IP cross-licenses remain in place following GE exiting its ownership
position in us. We do not consider any individual patent to be material to our business operations.
We follow a policy of seeking patent and trademark protection in numerous countries and regions throughout
the world for products and methods that appear to have commercial significance. We believe that maintenance,
protection and enforcement of our patents, trademarks, and related IP rights is central to the conduct of our
business, and aggressively pursue protection of our IP rights against infringement, misappropriation, or other
violation worldwide as may be necessary to protect our business. Additionally, we consider the quality and timely
delivery of our products, the service we provide to our customers, and the technical knowledge and skills of our
personnel to be other important components of the portfolio of capabilities and assets supporting our ability to
compete.
SEASONALITY
Our operations can be affected by seasonal events, which can temporarily affect the delivery and performance
of our products and services, and our customers' budgetary cycles. Examples of seasonal events that can impact
our business are set forth below:
•
•
•
Adverse weather conditions, such as hurricanes in the Gulf of Mexico, may interrupt or curtail coastal and
offshore drilling, which may impact our operations or our customers’ operations, cause supply disruptions
and result in a loss of revenue and damage to our equipment and facilities, which may or may not be
insured. Other adverse weather conditions could include extreme heat in the Middle East during the
summer months which may impact our operations or our customers' operations.
The severity and duration of both the summer and the winter in North America can have an impact on
activity levels and produce variability throughout the year.
Severe weather during the winter months normally results in reduced activity levels in the North Sea
generally in the first quarter and may interrupt or curtail our operations, or our customers’ operations, in
those areas and result in a loss of revenue.
• Many of our international OFSE customers may increase activity for certain products and services in the
fourth quarter as they seek to fully utilize their annual budgets.
• Our broader IET businesses typically experience higher customer activity as a result of spending patterns in
the second half of the year.
RAW MATERIALS
We purchase various raw materials and component parts for use in manufacturing our products and delivering
our services. The principal raw materials we use include steel alloys, chromium, nickel, titanium, barite, beryllium,
copper, lead, tungsten carbide, synthetic and natural diamonds, gels, sand and other proppants, printed circuit
boards and other electronic components, and hydrocarbon-based chemical feed stocks. Raw materials that are
essential to our business are normally readily available from multiple sources, but may be subject to price volatility.
Due to COVID-19 and other macro-economic factors, the availability of electronic components has resulted in
additional expediting activities, fulfillment challenges, and in some cases price increases. We have also seen price
increases for ferrous and non-ferrous metals and other raw materials. Our procurement teams utilize advanced
planning and may enter into strategic agreements with our global suppliers to minimize price impacts and other
availability challenges. We anticipate some pricing and fulfillment volatility for certain raw materials, components
and certain logistics lanes to continue through 2023.
Baker Hughes Company 2022 Form 10-K | 7
In addition to raw materials and component parts, we also use the products and services of metal fabricators,
machine shops, foundries, forge shops, assembly operations, contract manufacturers, logistics providers,
packagers, indirect material providers, and others in order to produce and deliver products to customers. These
materials and services are generally available from multiple sources.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
Environmental
We believe we have an important role to play in society as an industry leader and partner. We view ESG as a
key lever to transform the performance of our Company and our industry. In 2019, we made a commitment to
reduce Scope 1 and 2 carbon emissions from our operations by 50% by 2030 and achieve net zero emissions by
2050. This goal encompasses emissions from our direct operations ("Scope 1 and 2 carbon emissions") in
alignment with the Paris Agreement and the specific recommendations of the United Nations ("UN")
Intergovernmental Panel on Climate Change’s Special Report on Global Warming of 1.5oC.
We continue to make progress on emissions reductions. We reported in our 2021 Corporate Responsibility
report a 23% reduction in our Scope 1 and 2 carbon emissions compared to our 2019 base year. This reduction
was primarily due to executing on our net-zero roadmap and the key decarbonization pathways through a
combination of energy efficiency initiatives, facility consolidation, increasing electric power consumption from
renewable energy sources, and improvements in our vehicle fleet, among other reasons. We will continue to
employ a broad range of emissions reduction initiatives across manufacturing, supply chain, logistics, energy
sourcing, and generation.
We also continue efforts to reduce our overall environmental footprint by using materials wisely and preserving
land, water, and air quality. Our sustainability commitments include our formal participation in the UN Global
Compact ("UNGC") and our commitment to the Ten Principles including human rights, labor, environment, and anti-
corruption, as well as the UNGC's Sustainable Development Goals. We have annually renewed our commitment to
the UN Global Compact since joining in 2019.
Social & Human Capital
At Baker Hughes, our people are central contributors to our purpose of taking energy forward. As an energy
technology company with operations around the world, we believe that a diverse workforce is critical to our success,
and we aim to attract the best and most diverse talent to support the energy transition. We strive to be an inclusive
and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by
learning and development opportunities, competitive compensation, benefits, health and wellness programs, and by
programs that build connections between our employees and their communities.
As of December 31, 2022, we had approximately 55,000 employees. More than 42,000 of our employees work
outside the U.S. in over 85 different countries with more than 150 nationalities represented. This diversity of global
perspectives makes our Company stronger, more resilient, and more responsive to our global customers.
Diversity, Equity, and Inclusion ("DEI")
We believe unique ideas and perspectives fuel innovation and our differences make us stronger. We value
difference in gender, race, ethnicity, age, gender identity, sexual orientation, ability, cultural background, religion,
veteran status, experience, and thought across the globe. We celebrate the diversity and uniqueness of each
employee and believe that everyone has the right to be treated with fairness, dignity, and respect. And we know
that our commitment to DEI will enable us to continue to recruit and retain a diverse workforce, promote an inclusive
culture, expand our supplier diversity, and be a stronger partner to our customers and our community.
As we continue to prioritize DEI, we are focused on diversifying our workforce, with a particular emphasis on
increasing gender representation. In 2022, the percentage of people who identify as women in our workforce,
senior leadership positions, and on our Board of Directors, was 19%, 19%, and 33%, respectively. Specific to the
U.S., 36% of our employees identify as people of color.
Baker Hughes Company 2022 Form 10-K | 8
To ensure we have access to and support diverse pipelines of talent across the globe while prioritizing
development and retention, we have ongoing DEI annual plan meetings with our executive leadership team. These
annual meetings hold leadership accountable for integrating DEI into their respective parts of the business. We
have corporate memberships with respected nonprofits, such as Ally Energy, Catalyst, Disability:IN, and the
Women's Energy Network, which provide partnership and guidance as we continue our efforts in fostering a diverse,
equitable, and inclusive culture. Our talent acquisition efforts as well as our eight global employee resource groups
support the engagement and retention of diverse talent.
Talent Acquisition: We have enacted a number of initiatives to support our global goal of increasing the
number of diverse employees. We have conducted training on unconscious bias and launched pilot projects on
blind resumes and debiasing job descriptions, interview templates, and assessments as well as expanded our talent
acquisition focus to include executive search services.
Employee Resource Groups ("ERG"): ERGs consist of employees who have joined together based on shared
interests, characteristics, or life experiences. These groups can have a powerful influence on driving change by
elevating the conversation and awareness around key issues and engaging with the communities where we
operate. In 2022, we further expanded our support of the ERGs in several ways, including the opportunity for ERGs
to nominate charitable organizations to receive grants from the Baker Hughes Foundation. These efforts have
helped our DEI focus and fostered closer connections between employees in communities around the world.
Inclusive Culture: We have several programs and initiatives that cultivate an inclusive culture. The Baker
Hughes Global DEI Council, comprised of executives representing our businesses, functions and regions, supports
the success of our DEI mission and meets quarterly to review progress and discuss ways in which to continue to
advance our efforts. The DEI Community of Practice facilitates sharing best practices across the enterprise. We
provide our workforce with tools, resources, and learning opportunities that raise awareness, foster inclusive
behaviors, and build cross-cultural competences.
Compensation and Benefits
We are committed to paying for performance and supporting our employees’ wellbeing, as well as the wellbeing
of their families, by offering flexible and competitive benefits tailored by location to meet the specific needs of our
employees. We regularly assess our total compensation and benefits programs through regular benchmarking with
industry peers and local markets. We strive to ensure that our compensation programs are fair and equitable for all
employees. Healthcare plans and life insurance are a core benefit of the Company and are provided in most
locations. Baker Hughes offers various leaves of absence options for certain quality-of-life needs, including family
care. We also continue to assess and provide programs that support our employees' work arrangements such as
flexible schedules, compressed work weeks, hybrid work, remote work, and other options.
Learning and Development
Learning and Development is a personal journey at Baker Hughes. We empower our employees to follow their
passion for personal knowledge, job related skills, development, and the domain expertise needed for professional
and personal growth. In alignment with this, in 2022, we added CORE Strengths and Journey courses to our
learning communities catalog for our employees to learn, share and practice with their peers no matter where they
are in their career. CORE Strengths adds focus to the critical skills (for example Data Analytics, Project
Management, Change Management) that will help transform our organization, and Journey is targeted for our
promoted leaders to help them transition to their newly expanded role. Also in 2022, we started offering in-person
learning opportunities to compliment the robust virtual learning catalog with workshops, team development, and
flagships. In 2021, we launched the community, CORE Values, which is a curated learning space centered around
our Baker Hughes Values: Grow, Care, Collaborate & Lead, and the behaviors associated with each value. Each
learning community involves e-learning, virtual workshops, and allows participants to lead their own sessions.
Our formal leadership development programs play a pivotal role in attracting, retaining, and developing talent
and increasing the pipeline of diverse talent into and within the organization. As an example, Aspire is a two-year
rotational leadership program for recent graduates and early-career employees to grow functional and leadership
skills through challenging assignments, learning plans, and global cross-functional projects.
Baker Hughes Company 2022 Form 10-K | 9
Health, Safety, Environment, and Wellness
Health and safety is at the core of our culture as we are committed to doing the right thing to protect our
employees, customers, the communities where we live and work, and the environment. We take a risk-based
approach with proactive and preventive programs to deliver safe, secure, and sustainable operations. We have
established a stringent set of standards which meet or exceed global regulatory requirements.
Our commitment to HSE starts at the highest levels of our Company and is embedded throughout all layers of
the organization. We encourage and empower all employees to take an active role in "owning" HSE by stopping
work when conditions are unsafe and reporting observations, near misses, and stop-work events through open
reporting channels. Our teams are required to complete recurring training. We offer more than 230 unique HSE
courses including foundational training required for all employees, workplace and job-specific training, and human-
performance leadership training for managers. Our ambition is to make every day a Perfect HSE Day—one without
serious injuries, accidents, or harm to the environment. In 2022, we achieved 217 Perfect HSE Days, up 6% versus
2021.
Our commitment to HSE goes beyond safety alone. Occupational health and wellness is a key competency
jointly managed within our HSE and HR centers of excellence. Since the start of the COVID-19 pandemic, we have
taken prudent steps as a company to reduce the risk and spread of the virus. Our top priorities have remained:
protecting our employees, maintaining operations, and supporting customers and communities globally. As
conditions improved in certain places, we started bringing more employees back to offices and worksites and
enabled opportunities for more in-person engagements where it was safe to do so. We continue to monitor the
situation and will adapt our protocols as needed to protect our employees and deliver for our customers, in
alignment with all associated requirements.
The importance of physical health, ergonomics, preventative health care, and mental wellness cannot be
overstated in promoting a healthy, engaged, and productive workplace. We work with our health benefit providers
and internal teams to offer employees health and wellness programs, telemedicine access, health screenings,
immunizations, fitness reimbursements, and virtual wellness tools.
In 2022, the mental health and emotional well-being of our employees continued to be a critical priority. We
hosted numerous events with Baker Hughes leaders and external experts, further embedded mental well-being into
leadership engagements, and provided resources and tools to employees. Our Employee Assistance Program
("EAP") helps employees navigate daily life to manage remote work, cope with major life events or deal with a
global pandemic. The EAP gives employees and their family members direct access to professional coaches for in-
the-moment counseling or referrals to community experts and extended care providers.
Community Involvement
Baker Hughes seeks to make a positive impact in the communities where we conduct business around the
world. Consistent with our purpose and values, we work to advance environmental quality, educational
opportunities, health, and wellness. We benefit our communities through financial contributions, in-kind donations
of goods and services, and volunteer projects. The Baker Hughes Foundation makes strategic philanthropic
contributions, matches Baker Hughes employee charitable contributions, and awards volunteer recognition grants
for outstanding employee community service.
Governance
The Company’s Board of Directors ("the Board") believes the purpose of corporate governance is to maximize
shareholder value in a manner consistent with legal requirements and the highest standards of integrity. The Board
has adopted and adheres to corporate governance practices, which the Board and management believe promote
this purpose, are sound, and represent best practices. The Board periodically reviews these governance practices,
Delaware law (the state in which the Company is incorporated), the rules and listing standards of Nasdaq and SEC
regulations, as well as best practices suggested by recognized governance authorities.
Our Board monitors and provides oversight over our ESG policies, programs, and practices regarding corporate
responsibility and sustainability and plays an active role in overseeing our human capital management efforts. Our
Human Capital and Compensation Committee provides oversight of our social strategy, policies, programs, and
Baker Hughes Company 2022 Form 10-K | 10
initiatives focusing on DEI as well as pay equity, culture, talent development, succession planning, and executive
compensation and benefits. Our Governance & Corporate Responsibility Committee provides oversight of the
Company's environmental matters, including monitoring its sustainability strategy and initiatives and the
management of employee health, safety, and wellness matters. The Audit Committee provides oversight over the
Company’s risk assessment and risk management policies and processes, including data privacy, ethics, and
compliance reporting.
GOVERNMENTAL REGULATION
Environmental Matters
We are committed to the health and safety of people, protection of the environment and compliance with
environmental laws, regulations and our policies. Our past and present operations include activities that are subject
to extensive domestic (including U.S. federal, state and local) and international regulations concerning, among other
things, air and water quality, waste management, and land protection. Environmental regulations continue to
evolve, and changes in standards of enforcement of existing regulations, as well as the enactment of new
legislation, may require us and our customers to modify, supplement or replace equipment or facilities or to change
or discontinue present methods of operation. Our environmental compliance expenditures and our capital costs for
environmental control equipment may change accordingly.
While we seek to embed and verify sound environmental practices throughout our business, we are, and may in
the future be, involved in voluntary remediation projects at current and former properties, typically related to
historical operations. On rare occasions, our remediation activities are conducted as specified by a government
agency-issued consent decree or agreed order. Remediation costs at these properties are accrued using currently
available facts, existing environmental permits, technology and presently enacted laws and regulations. For sites
where we are primarily responsible for the remediation, our cost estimates are developed based on internal
evaluations and are not discounted. We record accruals when it is probable that we will be obligated to pay
amounts for environmental site evaluation, remediation or related activities, and such amounts can be reasonably
estimated. Accruals are recorded even if significant uncertainties exist over the ultimate cost of the remediation.
Ongoing environmental compliance costs, such as obtaining environmental permits, installation and maintenance of
pollution control equipment and waste disposal, are expensed as incurred.
The U.S. Comprehensive Environmental Response, Compensation and Liability Act (known as "Superfund")
imposes liability for the release of a "hazardous substance" into the environment. Superfund liability is imposed
without regard to fault, even if the waste disposal was in compliance with laws and regulations. We have been
identified as a potentially responsible party ("PRP") at various Superfund sites, and we accrue our share, if known,
of the estimated remediation costs for the site. PRPs in Superfund actions have joint and several liability and may
be required to pay more than their proportional share of such costs.
In some cases, it is not possible to quantify our ultimate exposure because the projects are either in the
investigative or early remediation stage, or superfund allocation information is not yet available. Based upon current
information, we believe that our overall compliance with environmental regulations, including remediation
obligations, environmental compliance costs and capital expenditures for environmental control equipment, will not
have a material adverse effect on our capital expenditures, earnings or competitive position because we have either
established adequate reserves or our compliance cost, based on available information, is not expected to be
material to our consolidated financial statements. Our total accrual for environmental remediation was $63 million
and $67 million at December 31, 2022 and 2021, respectively. We continue to focus on reducing future
environmental liabilities by maintaining appropriate Company standards and by improving our environmental
assurance programs.
Other Regulatory Matters
We are subject to regulation by various U.S. federal regulatory agencies and by the applicable regulatory
authorities in countries in which our products are manufactured or sold. Such regulations principally relate to the
ingredients, classification, labeling, safety, manufacturing, packaging, transportation, advertising, and marketing of
our products. Additionally, as a U.S. entity operating through subsidiaries in non-U.S. jurisdictions, we are subject to
foreign exchange control, transfer pricing and customs laws that regulate the import and export of goods as well as
the flow of funds between us and our subsidiaries. In particular, the shipment of goods, services and technology
Baker Hughes Company 2022 Form 10-K | 11
across international borders subjects us to extensive trade laws and regulations. Our import activities are governed
by the unique customs laws and regulations in each of the countries where we operate. Pursuant to their laws and
regulations, governments may impose economic sanctions against certain countries, persons and entities that may
restrict or prohibit transactions involving such countries, persons and entities, which may limit or prevent our
conduct of business in certain jurisdictions. We are also required to be in compliance with transfer pricing,
securities laws, and other statutes and regulations, such as the U.S. Foreign Corrupt Practices Act (the "FCPA") and
other countries’ anti-corruption and anti-bribery regimes.
As a result of the ongoing conflict between Russia and Ukraine that began in February of 2022, governments in
the U.S., United Kingdom, European Union ("EU"), and other countries enacted sanctions against Russia and
certain Russian interests. As previously announced on March 19, 2022, we suspended any new investments in our
Russia operations, but continued to comply with applicable laws and regulations as we fulfilled current contractual
obligations. Over the course of the second quarter of 2022, we closely monitored the developments in Ukraine and
Russia and changes to sanctions all of which continued to make ongoing operations increasingly complex and
significantly more challenging. As a result, we completed a number of actions during the course of 2022 including
the sale of part of our OFSE Russia business and suspended substantially all of our remaining operational activities
in Russia. For further information see "Note 20. Restructuring, Impairment and Other" and "Note 21. Business
Dispositions and Acquisitions” of the Notes to Consolidated Financial Statements in Item 8 herein.
We are also subject to laws relating to data privacy and security and consumer credit, protection and fraud. An
increasing number of governments worldwide have established laws and regulations, and industry groups also have
promoted various standards, regarding data privacy and security, including with respect to the protection and
processing of personal data. The legal and regulatory environment related to data privacy and security is
increasingly rigorous, with new and constantly changing requirements applicable to our business, and enforcement
practices are likely to remain uncertain for the foreseeable future. We are also subject to labor and employment
laws, including regulations established by the U.S. Department of Labor and other local regulatory agencies, which
sets laws governing working conditions, paid leave, workplace safety, wage and hour standards, and hiring and
employment practices.
While there are no current regulatory matters that we expect to be material to our results of operations, financial
position or cash flows, there can be no assurances that existing or future environmental laws and other laws,
regulations and standards applicable to our operations or products will not lead to a material adverse impact on our
financial condition, results of operations or cash flows.
AVAILABILITY OF INFORMATION FOR STOCKHOLDERS
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act"), are made available free of charge on our internet website at
www.bakerhughes.com as soon as reasonably practicable after these reports have been electronically filed with, or
furnished to, the SEC, and can be found at their internet website www.sec.gov. In addition, our Corporate
Responsibility reports are available on the Company section of our website at www.bakerhughes.com. Information
contained on or connected to our website is not incorporated by reference into this annual report on Form 10-K and
should not be considered part of this annual report or any other filing we make with the SEC.
We have a Code of Conduct to provide guidance to our directors, officers, and employees on matters of
business conduct and ethics, including compliance standards and procedures. We also require our principal
executive officer, principal financial officer and principal accounting officer to sign a Code of Ethical Conduct
Certification annually.
The Code of Conduct, referred to as Our Way: The Baker Hughes Code of Conduct, and the Code of Ethical
Conduct Certifications are available on the Investor section of our website at www.bakerhughes.com. We will
disclose on a current report on Form 8-K or on our website information about any amendment or waiver of these
codes for our executive officers and directors. Waiver information disclosed on our website will remain on the
website for at least 12 months after the initial disclosure of a waiver. Our Governance Principles and the charters of
our Audit Committee, Human Capital and Compensation Committee, Conflicts Committee, and Governance and
Corporate Responsibility Committee of our Board of Directors are also available on the Investor section of our
website at www.bakerhughes.com. In addition, a copy of the Code of Conduct, Code of Ethical Conduct
Baker Hughes Company 2022 Form 10-K | 12
Certifications, Governance Principles, and the charters of the committees referenced above are available in print at
no cost to any shareholder who requests them.
EXECUTIVE OFFICERS OF BAKER HUGHES COMPANY
The following table shows, as of February 14, 2023, the name of each of our executive officers, together with
his or her age and office presently or previously held. There are no family relationships among our executive
officers.
Name
Lorenzo Simonelli
Age
49
Nancy Buese
53
Jim Apostolides
45
Maria Claudia
Borras
54
Kurt Camilleri
48
Position and Background
Chairman, President and Chief Executive Officer
Lorenzo Simonelli has been the Chairman of the Board of Directors of the Company
since October 2017, and a Director, President and Chief Executive Officer of the
Company since July 2017. Prior to joining the Company in July 2017, Mr. Simonelli
was Senior Vice President, GE and President and Chief Executive Officer, GE Oil &
Gas from October 2013 to July 2017. Before joining GE Oil & Gas, he was the
President and Chief Executive Officer of GE Transportation from July 2008 to
October 2013. Mr. Simonelli joined GE in 1994 and held various finance and
leadership roles from 1994 to 2008.
Chief Financial Officer
Nancy Buese is the Chief Financial Officer of the Company. Prior to joining the
Company in November 2022, she served as Executive Vice President ("EVP") and
Chief Financial Officer ("CFO") of Newmont Corporation, a gold mining company,
since October 2016. Prior to her role at Newmont, Ms. Buese spent more than a
decade as EVP & CFO of MarkWest Energy Partners, a leader in gathering,
processing, and transportation of hydrocarbons, as well as EVP & CFO of MPLX (a
subsidiary of Marathon Petroleum) following MPLX’s acquisition of MarkWest. She
began her career in public accounting, starting as an accountant for Arthur Andersen
and rising to be a partner at Ernst & Young until 2003.
Senior Vice President, Enterprise Operational Excellence
Jim Apostolides is the Senior Vice President of Enterprise Operational Excellence of
the Company. He previously served as Senior Vice President of Enterprise
Excellence from February 2020 - September 2022. In July 2017, he was appointed
VP of Materials Management, Logistics, and Cash Operations. He began his career
in 1999 with GE and held roles of increasing responsibility, including managerial
positions in Shop Operations, Materials, Sourcing, and Fulfillment across multiple
continents.
Executive Vice President, Oilfield Services and Equipment
Maria Claudia Borras is the Executive Vice President, Oilfield Services and
Equipment of the Company. She previously served as Executive Vice President, of
Oilfield Services from July 2017 - September 2022. Prior to joining the Company in
July 2017, she served as the Chief Commercial Officer of GE Oil & Gas from January
2015 to July 2017. Prior to joining GE Oil & Gas, she held various leadership
positions at Baker Hughes Incorporated including President, Latin America from
October 2013 to December 2014, President, Europe Region from August 2011 to
October 2013, Vice President, Global Marketing from May 2009 to July 2011 and
other leadership roles at Baker Hughes Incorporated from 1994 to April 2009.
Senior Vice President, Controller and Chief Accounting Officer
Kurt Camilleri is the Senior Vice President, Controller and Chief Accounting Officer of
the Company. Prior to joining the Company in July 2017, he served as the Global
Controller for GE Oil & Gas from July 2013 to July 2017. Mr. Camilleri served as the
Global Controller for GE Transportation from January 2013 to June 2013 and the
Controller for Europe and Eastern and African Growth Markets for GE Healthcare
from 2010 to January 2013. He began his career in 1996 with Pricewaterhouse in
London, which subsequently became PricewaterhouseCoopers.
Baker Hughes Company 2022 Form 10-K | 13
Name
Regina Jones
Age
52
Ganesh
Ramaswamy
54
Position and Background
Chief Legal Officer
Regina Jones is the Chief Legal Officer of the Company. Prior to joining the Company
in May 2020, she served as Executive Vice President, General Counsel and
Corporate Secretary for Delek U.S. Holdings, Inc and Delek Logistics Partners LP
from May 2018 to April 2020. Prior to that, she worked at Schlumberger as General
Counsel for the Land Rigs product line from June 2016 to May 2018 and in various
international legal roles in France, Malaysia and the United States from 2005 to 2018.
Executive Vice President, Industrial & Energy Technology
Ganesh Ramaswamy is the Executive Vice President, Industrial & Energy
Technology. Prior to joining the Company in January 2023, he served as President of
Global Services for Johnson Controls. Prior to joining Johnson Controls, he served
at Danaher Corporation in various executive roles including Senior Vice President of
High Growth Markets at Beckman Coulter Diagnostics; President of Videojet
Technologies; and Group Executive for Marking & Coding. Earlier in his career,
Ramaswamy held executive roles at Hoya Corporation. He began his career in
product development and general management for GE Global Research and GE
Healthcare.
ITEM 1A. RISK FACTORS
An investment in our common stock involves various risks. When considering an investment in the Company,
one should carefully consider all of the risk factors described below, as well as other information included and
incorporated by reference in this annual report. There may be additional risks, uncertainties and matters not listed
below, that we are unaware of, or that we currently consider immaterial. Any of these may adversely affect our
business, financial condition, results of operations and cash flows and, thus, the value of an investment in the
Company.
OPERATIONAL RISKS
We operate in a highly competitive environment, which may adversely affect our ability to succeed. Our
investments in new technologies, equipment, and facilities may not provide competitive returns.
We operate in a highly competitive environment for marketing oilfield products and services and securing
equipment. Our ability to continually provide competitive products and services can impact our ability to defend,
maintain or increase prices for our products and services, maintain market share, and negotiate acceptable contract
terms with our customers. In order to be competitive, we must provide new and differentiating technologies, reliable
products and services that perform as expected and that create value for our customers.
We continue to invest in new technologies, equipment, and facilities. Our ability to defend, maintain or increase
prices for our products and services is in part dependent on the industry’s capacity relative to customer demand,
and on our ability to differentiate the value delivered by our products and services from our competitors’ products
and services. Managing development of competitive technology and new product introductions on a forecasted
schedule and at a forecasted cost can impact our financial results. If we are unable to continue to develop and
produce competitive and innovative technology or deliver it to our clients in a timely and cost-competitive manner in
response to changes in the market, customer requirements, competitive pressures, or as a result of the energy
transition to lower carbon emitting technology, or if competing technology accelerates the obsolescence of any of
our products or services, any competitive advantage that we may hold, and in turn, our business, financial condition,
results of operations and cash flows could be materially and adversely affected.
Failure to effectively and timely execute our energy transition strategy could have an adverse effect on the
demand for our technologies and services.
Our future success may depend upon our ability to effectively execute on our energy transition strategy. Our
strategy depends on our ability to develop additional innovative technologies and work with our customers and
partners to advance new energy solutions such as carbon capture utilization and storage, hydrogen energy,
geothermal, and other integrated solutions. If the energy transition landscape changes faster than anticipated or
faster than we can transition or if we fail to execute our energy transition strategy as planned, demand for our
technologies and services or access to credit could be adversely affected.
Baker Hughes Company 2022 Form 10-K | 14
The implementation of our plan to restructure our corporate organization and operating segments may not
achieve the results we anticipate, which could adversely affect our business.
In the second half of 2022, we announced a plan to undertake certain corporate realignments and restructure
our four operating segments to focus on two operating segments, OFSE and IET, in order to simplify and streamline
our organizational structure, and create better flexibility and economies of scale across the two operating segments.
These restructuring activities may be more costly than anticipated, and could lead to the diversion of management’s
attention from other business priorities. As a result of these or any other factors, we may not realize the anticipated
benefits associated with the restructuring plan. There can be no assurance that the restructuring plan will result in
cost savings or will materially increase our profitability. Even if the restructuring plan generates the benefits that we
have anticipated, there may be other unforeseeable and unintended factors or consequences that occur as a result
of the restructuring, which could adversely affect our business.
Disruptions in our supply chain, the high cost or unavailability of raw materials, equipment, and supplies
essential to our business could adversely affect our ability to execute our operations on a timely basis.
Our manufacturing operations are dependent on having sufficient raw materials, component parts and
manufacturing capacity, including labor, available to meet our manufacturing plans on a timely basis, at a
reasonable cost while minimizing inventories. Disruptions within our supply chain resulting from factors including,
but not limited to, the ongoing COVID-19 pandemic, inflation, rising interest rates, and shortages in labor supply,
have had and may continue to have an impact on our business and reputation. As a result of these or any other
factors, our ability to execute our operations on a timely basis, including our ability to meet our manufacturing plans
and revenue goals, control costs, and avoid shortages or over-supply of raw materials and component parts, could
be adversely affected.
If we are unable to attract and retain key personnel, we may not be able to execute our business strategy
effectively and our operations could be adversely affected.
Our operations and future success depend on our ability to recruit, train, and retain key personnel. People are a
key resource to developing, manufacturing, and delivering our products and providing technical services to our
customers around the world. A competent, well-trained, highly skilled, motivated, and diverse workforce has a
positive impact on our ability to attract and retain business. Difficulties in hiring or retaining key employees, or the
unexpected loss of experienced employees resulting in the depletion of our institutional knowledge base, could have
an adverse impact on our business performance, reputation, financial condition, or results of operations.
Additionally, successfully executing organizational change as we restructure the Company, management transitions
at leadership levels of the Company, and motivation and retention of key employees is critical to our business
success. Factors that may affect our ability to attract and retain sufficient numbers of qualified employees include
employee morale, our reputation, competition from other employers, and availability of qualified individuals. Other
factors that have and could continue to impact our workforce is changes to our office environments, the adoption of
new work models, and our requirements and/or expectations about when or how often certain employees work on-
site or remotely which may not meet the expectations of our employees.
Our business could be impacted by both geopolitical and terrorism threats, including armed conflict, in
countries where we or our customers do business and our business operations may be impacted by civil
unrest and/or government expropriations.
Geopolitical and terrorism threats continue to grow in a number of key countries where we currently or may in
the future do business. Geopolitical and terrorism threats, including armed conflict among countries, has had and
could in the future lead to, among other things, a loss of our investment in the country, adverse impact to our
employees, and impairment of our or our customers’ ability to conduct operations.
Further, the broader consequences of geopolitical and terrorism threats, which may include further sanctions
that prohibit our ability to do business in specific countries, embargoes, supply chain disruptions, the potential
inability to service our remaining performance obligations and potential contractual breaches and litigation, regional
instability and geopolitical shifts, and the extent of any such threats effect on our business and results of operations
as well as the global economy, cannot be predicted.
Baker Hughes Company 2022 Form 10-K | 15
Certain geopolitical conflicts, such as between Russia and Ukraine, have had and may continue to have the
effect of heightening many other risks disclosed in our public filings, any of which could materially and adversely
affect our business and results of operations. Such risks include, but are not limited to, adverse effects on global
macroeconomic conditions; increased volatility in the price and demand of oil and natural gas, increased exposure
to cyber attacks; limitations in our ability to implement and execute our business strategy; risks to employees and
contractors that we have in the region; disruptions in global supply chains; exposure to foreign currency fluctuations;
potential nationalizations and assets seizures; constraints or disruption in the capital markets and our sources of
liquidity; our potential inability to service our remaining performance obligations and potential contractual breaches
and litigation.
Control of oil and natural gas reserves by national oil companies may impact the demand for our services
and products and create additional risks in our operations.
Much of the world’s oil and natural gas reserves are controlled by national oil companies. National oil
companies may require their contractors to meet local content requirements or other local standards, such as
conducting our operations through joint ventures with local partners that could be difficult or undesirable for us to
meet. The failure to meet the local content requirements and other local standards may adversely impact our
operations in those countries. In addition, our ability to work with national oil companies is subject to our ability to
negotiate and agree upon acceptable contract terms.
Our operations involve a variety of operating hazards and risks that could cause losses.
The products that we manufacture and the services that we provide are complex, and the failure of our
equipment to operate properly or to meet specifications may greatly increase our customers’ costs. In addition,
many of these products are used in inherently hazardous industries, such as the offshore oilfield business. These
hazards include blowouts, explosions, unplanned or uncontrolled releases, nuclear-related events, fires, collisions,
capsizings, and severe weather conditions. We may incur substantial liabilities or losses as a result of these
hazards. Our insurance and contractual indemnity protection may not be sufficient or effective to protect us under
all circumstances or against all risks. The occurrence of a significant event, against which we were not fully insured
or indemnified or the failure of a customer to meet its indemnification obligations to us, could materially and
adversely affect our results of operations and financial condition.
The potential physical or transition risks posed by climate change could adversely affect our operations
and those of our customers.
There is increasing concern over risks posed by climate change and related environmental sustainability
matters. The physical risks of climate change can include extreme variability in weather patterns such as increased
frequency and severity of significant weather events (e.g. flooding, hurricanes and tropical storms), natural hazards
(e.g., increased wildfire risk), rising mean temperature and sea levels, and long-term changes in precipitation
patterns (e.g. drought, desertification, or poor water quality). Such effects have the potential to affect business
continuity and operating results, particularly at facilities in coastal areas or areas prone to chronic water scarcity,
and could disrupt our operations or those of our customers or suppliers, including through direct damage to physical
assets and indirect impacts from supply chain disruption and market volatility. While we evaluate and incorporate
potential ranges of physical risks, it is difficult to predict with certainty the timing, frequency or severity of such
events, any of which could have a material adverse effect on our financial condition, results of operations and cash
flows. See also “Seasonal and weather conditions, including severe weather associated with climate change, could
adversely affect demand for our services and operations.”
Additionally, transitioning to a low-carbon economy will likely require extensive policy, legal, technology, and
market changes. There is increased focus by governments and our customers, investors and other stakeholders on
climate change, sustainability, and energy transition matters. Negative attitudes toward or perceptions of our
industry or fossil fuel products and their relationship to the environment have led governments, non-governmental
organizations, and companies to implement initiatives to conserve energy and promote the use of alternative energy
sources, which may reduce the demand for and production of oil and gas in areas of the world where our customers
operate, and thus reduce future demand for our products and services. In addition, initiatives by investors and
financial institutions to limit funding to companies in fossil fuel-related industries may adversely affect our liquidity or
access to capital.
Baker Hughes Company 2022 Form 10-K | 16
Seasonal and weather conditions, including severe weather associated with climate change, could
adversely affect demand for our services and operations.
Variation from normal weather patterns, such as cooler or warmer summers and winters, can have a significant
impact on demand for our services and operations. Adverse weather conditions, such as hurricanes in the Gulf of
Mexico, may interrupt or curtail our operations, or our customers’ operations, cause supply disruptions and result in
a loss of revenue and damage to our equipment and facilities, which may or may not be insured. For example,
extreme winter conditions in Canada or the North Sea may interrupt or curtail our operations, or our customers’
operations, in those areas and result in a loss of revenue. Repercussions of severe or unseasonable weather
conditions, including as a result of climate change, may include evacuation of personnel and curtailment of services;
weather-related damage to offshore drilling rigs resulting in suspension of operations; weather-related damage to
our facilities and project work sites; inability to deliver materials to job sites in accordance with contract schedules;
decreases in demand for oil and natural gas during unseasonably warm winters; and loss of productivity. As a result
of the above repercussions or any others, demand for our services and operations may be adversely affected.
The partial or complete loss of GE as a customer or supplier, as well as contracts with our aeroderivative
joint venture (the “Aero JV”) with GE may adversely affect our business, financial condition, results of
operations and cash flows.
We currently have an extensive commercial relationship with GE. Although we have a long-term contractual
framework in place with GE, if GE were to discontinue or reduce its business with the Company, fail to perform its
obligations under existing contracts or experience significant disruptions, including under the intellectual property
related agreements with GE, our business, financial condition, results of operations and cash flows may be
adversely affected.
In addition to our contracts and arrangements with GE as a direct customer and supplier, we and GE formed the
Aero JV in 2019. The Aero JV is jointly controlled by GE and us, and as a result, realizing the benefits of this joint
venture depends on the continued cooperation between the parties. In addition, the business and financial
performance of the Aero JV may be adversely affected if GE were to fail to perform its obligations under its contracts
with the Aero JV. We in turn use certain products purchased through the Aero JV for the manufacture of various
end products, and therefore, failure of the Aero JV to perform for any reason could prevent us from fulfilling our
contractual obligations, which may adversely affect our business, financial condition, results of operations and cash
flows.
Our business has and may continue to be adversely affected by a public health emergency or outbreak of a
contagious disease or virus, such as the COVID-19 pandemic.
In the past, the markets have experienced volatility in oil demand due to the economic impacts of public health
emergencies, such as the COVID-19 pandemic. If demand for our products and services decline as a result of a
public health emergency, the utilization of our assets and the prices we are able to charge our customers for our
products and services could decline. The continued spread of COVID-19 or a similar pandemic could result in
further instability in the markets and decreases in commodity prices resulting in further adverse impacts on our
financial condition, results of operations and cash flows.
In addition, the outbreak and spread of contagious diseases such as COVID-19 and measures to contain the
disease may adversely impact our workforce and operations, operations of our customers, and those of our vendors
and suppliers. The extent to which these public health emergencies, including the COVID-19 pandemic, may
continue to adversely impact our business depends on future developments, which are highly uncertain and
unpredictable, depending on the severity and duration of the emergency and effectiveness of actions taken globally
to contain or mitigate its effects. There is considerable uncertainty regarding such containment or mitigation
measures and potential future measures which may result in labor disruptions, employee attrition, and could
negatively impact our ability to attract and retain qualified employees, all of which could have a material adverse
effect on our financial condition, results of operations and cash flows.
Baker Hughes Company 2022 Form 10-K | 17
CREDIT AND CUSTOMER CONTRACTING RISKS
Providing services on an integrated, turnkey, or fixed price basis could require us to assume additional
risks.
We may choose to enter into integrated or turnkey contracts with our customers that require us to provide
services and equipment outside of our core business. Providing services on an integrated or turnkey basis may
also subject us to additional risks, such as costs associated with unexpected delays or difficulties in drilling
operations, project management interface risk, and risks associated with subcontracting and consortium
arrangements. These integrated or turnkey contracts may be fixed price contracts that do not allow us to recover
for cost over-runs unless they are directly caused by the customer.
We may not be able to satisfy technical requirements, testing requirements or other specifications required
under our service contracts and equipment purchase agreements.
Our products are used in deepwater, and other harsh environments, and severe service applications. Our
contracts with customers and customer requests for bids typically set forth detailed specifications or technical
requirements for our products and services, which may also include extensive testing requirements. In addition,
scrutiny of the offshore drilling industry has resulted in more stringent technical specifications for our products and
more comprehensive testing requirements for our products to ensure compliance with such specifications. We
cannot provide assurance that our products, including products supplied through joint ventures, will be able to
satisfy the specifications or that we will be able to perform the full-scale testing necessary to prove that the product
specifications are satisfied in future contract bids or under existing contracts, or that the costs of modifications to our
products to satisfy the specifications and testing will not adversely affect our results of operations.
We sometimes enter into consortium or similar arrangements for certain projects, which could impose
additional costs and obligations on us.
We sometimes enter into consortium or similar arrangements for certain projects. Under such arrangements,
each party is responsible for performing a certain scope of work within the total scope of the contracted work, and
the obligations expire when all contractual obligations are completed. The failure or inability, financially or
otherwise, of any of the parties to perform their obligations could impose additional costs and obligations on us.
These factors could result in unanticipated costs to complete the project, liquidated damages or contract disputes.
Our contracts may be terminated early in certain circumstances.
Our contracts with customers generally may be terminated by the customer for convenience, default, or
extended force majeure (which could include inability to perform due to COVID-19 or a similar pandemic).
Termination for convenience may require the payment of an early termination fee by the customer, but the early
termination fee may not fully compensate us for the loss of the contract. Termination by the customer for default or
extended force majeure due to events outside of our control generally will not require the customer to pay an early
termination fee.
Our financial condition, results of operations and cash flows could be materially adversely affected if our
customers terminate some of our contracts, and we are unable to secure new contracts on a timely basis and on
substantially similar terms, if payments due under our contracts are suspended for an extended period of time, or if
a number of our contracts are renegotiated. Our remaining performance obligation ("RPO") is comprised of unfilled
customer orders for products and product services (expected life of contract sales for product services). The actual
amount and timing of revenues earned may be substantially different than the reported RPO. The total dollar
amount of the Company’s RPO as of December 31, 2022 was $27.8 billion.
The credit risks of having a concentrated customer base in the energy industry could result in losses.
Having a concentration of customers in the energy industry may impact our overall exposure to credit risk as our
customers may be similarly affected by prolonged changes in economic and industry conditions. Some of our
customers may experience extreme financial distress as a result of falling commodity prices and may be forced to
seek protection under applicable bankruptcy laws, which may affect our ability to recover any amounts due from
such customers. Furthermore, countries that rely heavily upon income from hydrocarbon exports have been and
Baker Hughes Company 2022 Form 10-K | 18
may in the future be negatively and significantly affected by a drop in oil prices, which could affect our ability to
collect from our customers in these countries, particularly national oil companies. Laws in some jurisdictions in
which we will operate could make collection difficult or time consuming. We perform ongoing credit evaluations of
our customers and do not expect to require collateral in support of our trade receivables. While we maintain
reserves for potential credit losses, we cannot assure such reserves will be sufficient to meet write-offs of
uncollectible receivables or that our losses from such receivables will be consistent with our expectations.
Additionally, in the event of a bankruptcy of any of our customers, we may be treated as an unsecured creditor and
may collect substantially less, or none, of the amounts owed to us by such customer.
Our customers’ activity levels and spending for our products and services and ability to pay amounts owed
us could be impacted by the reduction of their cash flow and the ability of our customers to access equity
or credit markets.
Our customers’ access to capital is dependent on their ability to access the funds necessary to develop
economically attractive projects based upon their expectations of future energy prices, required investments, and
resulting returns. Limited access to external sources of funding has caused and may continue to cause customers
to reduce their capital spending plans to levels supported by internally generated cash flow. In addition, a reduction
of cash flow resulting from declines in commodity prices, a reduction in borrowing bases under reserve-based credit
facilities or the lack of available debt or equity financing may impact the ability of our customers to pay amounts
owed to us and could cause us to increase our reserve for credit losses.
LEGAL AND REGULATORY RISKS
Compliance with and changes in laws could be costly and could affect operating results. In addition,
government disruptions could negatively impact our ability to conduct our business.
We conduct business in more than 120 countries that can be impacted by expected and unexpected changes in
the legal and business environments in which we operate. In particular, the shipment of goods, services and
technology across international borders subjects us to extensive trade laws and regulations. Our import activities
are governed by the unique customs laws and regulations in each of the countries where we operate. Pursuant to
their laws and regulations, governments may impose economic sanctions against certain countries, persons and
entities that may restrict or prohibit transactions involving such countries, persons and entities, which may limit or
prevent our conduct of business in certain jurisdictions.
Compliance-related issues could limit our ability to do business in certain countries and impact our earnings or
result in investigations leading to fines, penalties or other remedial measures. Changes that could impact the legal
environment include new legislation, new regulations, new policies, investigations, and legal proceedings and new
interpretations of existing legal rules and regulations, in particular, changes in export control laws or exchange
control laws, additional restrictions on doing business in countries subject to sanctions, and changes in laws in
countries where we operate. In addition, changes and uncertainty in the political environments in which our
businesses operate can have a material effect on the laws, rules, and regulations that affect our operations.
Government disruptions may also delay or halt the granting and renewal of permits, licenses and other items
required by us and our customers to conduct our business. The continued success of our global business and
operations depends, in part, on our ability to continue to anticipate and effectively manage these and other political,
legal and regulatory risks.
Our failure to comply with the Foreign Corrupt Practices Act ("FCPA") and other similar laws could have a
negative impact on our ongoing operations.
Our ability to comply with the FCPA, the U.K. Bribery Act, and various other anti-bribery and anti-corruption laws
depends on the success of our ongoing compliance program, including our ability to successfully manage our
agents, distributors and other business partners, and supervise, train, and retain competent employees. We could
be subject to sanctions and civil and criminal prosecution, fines and penalties, as well as legal expenses and
reputational harm in the event of a finding of a violation of any of these laws by us or any of our employees.
Baker Hughes Company 2022 Form 10-K | 19
Anti-money laundering and anti-terrorism financing laws could have adverse consequences for us.
Non-compliance with anti-money laundering, anti-terrorism financing and various other financial laws may
subject us to sanctions, civil and criminal prosecution, fines and penalties, as well as legal expenses and potential
reputational harm. We cannot be sure our programs and controls are or will remain effective to ensure our
compliance with all applicable anti-money laundering and anti-terrorism financing laws and regulations.
Changes in tax laws, tax rates, tariffs, adverse positions taken by taxing authorities, and tax audits could
impact operating results.
Changes in tax laws, tax rates, tariffs, changes in interpretation of tax laws, the resolution of tax assessments or
audits by various tax authorities, and the ability to fully utilize tax loss carryforwards and tax credits could impact our
operating results, including additional valuation allowances for deferred tax assets.
We could be subject to litigation claims arising out of our products and services which could adversely
affect our reputation, financial condition, results of operations and cash flows.
The technical complexities of our operations expose us to a wide range of significant health, safety and
environmental risks and we are from time to time subject to litigation in the U.S. and in foreign countries, for
example claims involving services or equipment such as personal injury or loss of life, product failure (including as a
result of a cyber attack) or damage to or destruction of property, employment and labor, customer privacy, or
regulatory risks. While we have insurance coverage against operating hazards to the extent deemed prudent by our
management and to the extent insurance is available, our insurance may not cover all expenses related to litigation
claims arising from our business. Moreover, we may not be able to maintain insurance at levels of risk coverage or
policy limits that we deem adequate. We may therefore incur significant expenses defending any such suit or
government charge and may be required to pay amounts or otherwise change our operations in ways that could
adversely affect our financial condition, results of operations and cash flows.
We may be subject to litigation if another party claims that we have infringed upon, misappropriated or
otherwise violated its intellectual property rights.
The tools, techniques, methodologies, programs and components we use to provide our products and services
may infringe upon, misappropriate or otherwise violate the intellectual property rights of others or be challenged on
that basis. Regardless of the merits, any such claims may result in significant legal and other costs and may
distract management from running our core business. Resolving such claims could increase our costs, including
through royalty payments to acquire licenses, if available, from third parties and through the development of
replacement technologies. If a license to resolve a claim were not available, we might not be able to continue
providing a particular service or product, which could adversely affect our financial condition, results of operations
and cash flows.
Compliance with, and rulings and litigation in connection with, environmental regulations and the
environmental impacts of our operations may adversely affect our business and operating results.
We and our business are subject to extensive domestic and international environmental and safety regulations.
In addition to environmental and safety regulatory compliance obligations, we may face liability arising out of the
normal course of business, including alleged personal injury, property damage, and human health risks due to
exposure of hazardous substances or processes at our current or former facilities. We may be impacted by material
changes in environmental and safety regulations or subject to substantial liability for environmental impacts.
Compliance with environmental laws and regulations and associated expenditures, including but not limited to our
capital expenditures for environmental control equipment, are forecasted and may be inconsistent based on multiple
variables. Our compliance cost forecasts may be substantially different from actual results, which may be affected
by factors such as: changes in law that impose restrictions on air or other emissions, wastewater management,
waste disposal, hydraulic fracturing, or wetland and land use practices; changes in standards of enforcement of
existing environmental laws and regulations; a change in our share of any remediation costs or other unexpected,
adverse outcomes with respect to sites where we have been named as a potentially responsible party, and may
include Superfund sites; the discovery of other sites, or discovery of additional issues at existing sites, where
additional expenditures may be required to comply with environmental legal obligations; and the accidental
discharge of hazardous materials.
Baker Hughes Company 2022 Form 10-K | 20
Investor and public perception related to the Company’s environment, social, and governance ("ESG")
performance as well as current and future ESG reporting requirements may affect our business and our
operating results.
Increasing focus on ESG factors has led to enhanced interest in, and review of performance results by investors
and other stakeholders, and the potential for litigation and reputational risk. We are committed to transparent and
comprehensive reporting of our sustainability performance and report under standards such as the Global Reporting
Initiative, the Sustainability Accounting Standards Board ("SASB"), and recommendations issued by the Financial
Stability Board's Task Force for Climate-related Financial Disclosures ("TCFD"). Our voluntary disclosures of ESG
data are evaluated and rated by various organizations that assess corporate ESG performance. Over the past few
years there has also been increased investor demand for ESG investing opportunities, and the ESG ratings are
used by some stakeholders to inform their investment and voting decisions. Unfavorable ESG ratings, or our
inability to meet the ESG standards set by specific investors, may lead to unfavorable sentiment toward Baker
Hughes, which could have a negative impact, among other things, on our stock price and cost of capital.
Regulatory requirements related to ESG or sustainability reporting have been adopted in the EU that apply to
financial market participants. In the U.S., such regulations have been issued related to pension investments in
California, and for the responsible investment of public funds in Illinois. Additional regulation is pending at the SEC
and in other states. We expect regulatory requirements related to ESG matters to continue to expand globally. We
may be affected by our ability to meet evolving and expanding emissions reporting requirements and by investor
and public perception of our reporting and performance related to voluntary climate standards.
To achieve our stated emission reduction goals, we have implemented internal decarbonization projects and
may also need to rely on external factors, such as the greater deployment of carbon reduction and removal
technologies and adoption of government policies that we expect would accelerate the adoption of energy transition
technologies. There have been policy responses to support the energy transition in the U.S. with the passage of the
Inflation Reduction Act. In addition, the 2022 energy disruptions have increased energy prices and raised energy
security concerns, which may force many governments to reassess energy transition strategies, extending the
timeline to ensure adequate and reasonably priced energy supplies. It is difficult to predict with certainty how these
policy, economic, and energy security issues will impact the energy transition. Our failure or perceived failure to
pursue or fulfill our reductions and elimination of carbon equivalent emissions commitments within the timelines we
announce could have a negative impact on investor sentiment, ratings outcomes for evaluating our approach to
ESG matters, our stock price and cost of capital and expose us to government enforcement actions and private
litigation, among other material adverse impacts.
International, national, and state governments and agencies continue to evaluate and promulgate
legislation and regulations that are focused on reducing greenhouse gas ("GHG") emissions. Compliance
with GHG emission regulations applicable to our or our customers' operations may have significant
implications that could adversely affect our business and operating results in the fossil-fuel sectors.
In the United States, the U.S. Environmental Protection Agency ("EPA") has taken steps to regulate GHG
emissions as air pollutants under the U.S. Clean Air Act ("CAA") of 1970, as amended. The EPA’s Greenhouse Gas
Reporting Rule requires monitoring and reporting of GHG emissions from, among others, certain mobile and
stationary GHG emission sources in the oil and natural gas industry, which in turn may include data from our
equipment or operations. In addition, the U.S. government has proposed rules in the past setting GHG emission
standards for, or otherwise aimed at reducing GHG emissions from, the oil and natural gas industry. International
developments focused on restricting GHG emissions include the United Nations Framework Convention on Climate
Change, which includes implementation of the Paris Agreement and the Kyoto Protocol by the signatories; the
Glasgow Climate Pact; the European Union Emission Trading System; Article 8 of the European Union Energy
Efficiency Directive and the United Kingdom’s Streamlined Energy and Carbon Reporting ("SECR"); the EU's
proposed carbon border adjustment mechanism ("CBAM"). Caps or fees on carbon emissions, including in the
U.S., have been and may continue to be established and the cost of such caps or fees could disproportionately
affect the fossil-fuel sectors. The implementation of these agreements and other existing or future regulatory
mandates, may adversely affect the demand for our products and services, require us or our customers to reduce
GHG emissions or impose taxes on us or our customers, all of which could have a material effect on our results of
operations.
Baker Hughes Company 2022 Form 10-K | 21
Voluntary initiatives to reduce GHG emissions, as well as increased climate change awareness, may result
in increased costs for the oil and gas industry to curb greenhouse gas emissions and could have an
adverse impact on demand for oil and natural gas.
There are various corporate and non-governmental initiatives that are focused on voluntary reductions of GHG
emissions. These developments, and public perception relating to climate change, may shift demand from oil and
natural gas towards an investment in relatively lower carbon emitting energy sources and alternative energy
solutions. If, for example, new energy sources become more competitive than oil and natural gas globally, it could
have a material effect on our results of operations.
Changes in laws or regulations relating to data privacy and security, or any actual or perceived failure by us
to comply with such laws or regulations, or contractual or other obligations relating to data privacy or
security, may adversely affect our business and operating results.
We may have access to sensitive, confidential, proprietary or personal data or information in certain of our
businesses that is or may become subject to various data privacy and security laws, regulations, standards,
contractual obligations or customer-imposed controls in the jurisdictions in which we operate. The legal and
regulatory environment related to data privacy and security is increasingly rigorous, with new and constantly
changing requirements applicable to our business, and enforcement practices are likely to remain uncertain for the
foreseeable future. These laws and regulations may be interpreted and applied differently over time and from
jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may adversely
affect our business and operating results.
In the U.S., various federal and state regulators, including governmental agencies like the Federal Trade
Commission, have adopted, or are considering adopting, laws, regulations and standards concerning personal
information, privacy and data security. Internationally, laws, regulations and standards in many jurisdictions apply
broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information or
other data. These various and evolving federal, state and international laws, regulations and standards can differ
significantly from one another and, given our global footprint, this may significantly complicate our compliance
efforts and impose considerable costs, such as costs related to organizational changes and implementing additional
protection technologies, which are likely to increase over time. In addition, compliance with applicable requirements
may require us to modify our data processing practices and policies, distract management or divert resources from
other initiatives and projects, all of which could adversely affect our business and operating results. Any failure or
perceived failure by us to comply with any applicable federal, state or international laws, regulations, standards, or
contractual or other obligations, relating to data privacy and security could result in damage to our reputation and
our relationship with our customers, as well as proceedings or litigation by governmental agencies, customers or
individuals, which could subject us to significant fines, sanctions, awards, penalties or judgments, all of which could
adversely affect our business and operating results.
TECHNOLOGY RISKS
An inability to obtain, maintain, protect, defend or enforce our intellectual property rights could adversely
affect our business.
There can be no assurance that the steps we take to obtain, maintain, protect, defend and enforce our
intellectual property rights will be completely adequate. Our intellectual property rights may fail to provide us with
significant competitive advantages, particularly in foreign jurisdictions where we have not invested in an intellectual
property portfolio or that do not have, or do not enforce, strong intellectual property rights. The weakening of
protection of our trademarks, patents, trade secrets and other intellectual property rights could also adversely affect
our business.
We are a party to a number of licenses that give us rights to intellectual property that is necessary or useful to
our business. Our success depends in part on the ability of our licensors to obtain, maintain, protect, defend and
sufficiently enforce the licensed intellectual property rights we have commercialized. Without protection for the
intellectual property rights we own or license, other companies might be able to offer substantially identical products
for sale, which could adversely affect our competitive business position and harm our business products. Also,
there can be no assurances that we will be able to obtain or renew from third parties the licenses to use intellectual
property rights we need in the future, and there is no assurance that such licenses can be obtained on reasonable
Baker Hughes Company 2022 Form 10-K | 22
terms. We would be adversely affected in the event that any such license agreement was terminated without the
right for us to continue using the licensed intellectual property.
Increased cybersecurity vulnerabilities and threats, and more sophisticated and targeted cyber attacks and
other security incidents, pose risks to our systems, data and business, and our relationships with
customers and other third parties.
In the course of conducting our business, we may hold or have access to sensitive, confidential, proprietary or
personal data or information belonging to us, our employees or third parties, including customers, partners or
suppliers. Increased cybersecurity vulnerabilities and threats, and more sophisticated and targeted cyber attacks
and other security incidents, pose risks to our and our customers’, partners’, suppliers’ and third-party service
providers’ systems, data, and business, and the confidentiality, availability and integrity of our and our employees’
and customers’ data. We utilize various procedures and controls to monitor and mitigate our exposure including the
engagement of third party security experts for risk assessments and program enhancements, including ransomware
vulnerability assessments, cybersecurity tabletop exercises, and internal phishing awareness campaigns. While we
attempt to mitigate these risks, we remain vulnerable to cyber attacks and other security incidents, including
ransomware incidents. Given our global footprint, the large number of customers, partners, suppliers and service
providers with which we do business, and the increasing sophistication and complexity of cyber attacks, a cyber
attack could occur and persist for an extended period without detection. Any investigation of a cyber attack or other
security incident would be inherently unpredictable and it would take time before the completion of any investigation
and before there is availability of full and reliable information. During such time we would not necessarily know the
extent of the harm or how best to remediate it, and certain errors or actions could be repeated or compounded
before they are discovered and remediated, all or any of which would further increase the costs and consequences
of a cyber attack or other security incident. We may be required to expend significant resources to protect against,
respond to, and recover from any cyber attacks and other security incidents. As cyber attacks continue to evolve,
we may be required to expend significant additional resources to continue to modify or enhance our protective
measures or to investigate and remediate any information security vulnerabilities. In addition, our remediation
efforts may not be successful. The inability to implement, maintain and upgrade adequate safeguards could
materially and adversely affect our financial condition, results of operations and cash flows.
In addition to our own systems, we use third-party service providers, who in turn may also use third-party
providers, to process certain data or information on our behalf. Due to applicable laws and regulations or
contractual obligations, we may be held responsible for cybersecurity incidents attributed to our service providers to
the extent affecting information we share with them. Although we contractually require these service providers to
implement and maintain reasonable security measures, we cannot control third parties and cannot guarantee that a
security breach will not occur in their systems.
Despite our and our service providers’ efforts to protect our data and information, we and our service providers
have been and may in the future be vulnerable to security breaches, ransomware attacks, theft, misplaced or lost
data, programming errors, phishing attacks, denial of service attacks, acts of vandalism, computer viruses, malware,
employee errors and/or malfeasance or similar events, including those perpetrated by criminals or nation-state
actors, that could potentially lead to the compromise, unauthorized access, use, disclosure, modification or
destruction of data or information, improper use of our systems, defective products, loss of access to our data,
production downtimes and operational disruptions. In addition, a cyber attack or any other significant compromise
or breach of our data security, media reports about such an incident, whether accurate or not, or, under certain
circumstances, our failure to make adequate or timely disclosures to the public, law enforcement agencies or
affected individuals following any such event, whether due to delayed discovery or a failure to follow existing
protocols, could adversely impact our operating results and result in other negative consequences, including
damage to our reputation or competitiveness, harm to our relationships with customers, partners, suppliers and
other third parties, distraction to our management, remediation or increased protection costs, significant litigation or
regulatory action, fines and penalties. Given the increased prevalence of customer-imposed cybersecurity controls
and other related contractual obligations towards customers or other third parties, a cyber attack or other security
incident also could result in breach of contract or indemnity claims against us by customers or other counterparties.
While we currently maintain cybersecurity insurance, such insurance may not be sufficient in type or amount to
cover us against claims related to cybersecurity breaches or attacks, failures or other data security-related
incidents, and we cannot be certain that cyber insurance will continue to be available to us on economically
reasonable terms, or at all, or that an insurer will not deny coverage as to any future claim. The successful
Baker Hughes Company 2022 Form 10-K | 23
assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of
changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance
requirements, could materially and adversely affect our financial condition, results of operations and cash flows.
INDUSTRY AND MARKET RISKS
Volatility of oil and natural gas prices can adversely affect demand for our products and services.
Prices of oil and gas products are set on a commodity basis. As a result, the volatility in oil and natural gas
prices can impact our customers’ activity levels and spending for our products and services. Current energy prices
are important contributors to cash flow for our customers and their ability to fund exploration and development
activities. Expectations about future prices and price volatility are important for determining future spending levels.
Demand for our products and services is subject to factors beyond our control and depends substantially
on expenditures by our customers. Changes in the global economy could impact our customers’ spending
levels and our financial condition, results of operations and cash flows.
Demand for our services and products is highly correlated with global economic growth and substantially
dependent on the levels of expenditures by our customers. Across our products and services, customer demand
may be reduced due to global economic factors beyond our control, including but not limited to inflation, rising
interest rates, fluctuations in foreign exchange rates, and declining availability of credit. Specifically, for example,
past oil and natural gas industry downturns have resulted in reduced demand for oilfield products and services and
lower expenditures by our customers, which in the past has resulted, and may in the future result, in a prolonged
reduction in oil and natural gas prices that may require us to record asset impairments, and we could experience
decreased revenue, decreased profitability and reduction in cash flows. Such potential impairment charges and
adverse operating metrics could have a material adverse effect on our financial condition, results of operations and
cash flows.
Supply of oil and natural gas is subject to factors beyond our control, which may adversely affect our
operating results.
Productive capacity for oil and natural gas is dependent on our customers’ decisions to develop and produce oil
and natural gas reserves and on the regulatory environment in which our customers and we operate. The ability to
produce oil and natural gas can be affected by the number and productivity of new wells drilled and completed, as
well as the rate of production and resulting depletion of existing wells.
Currency fluctuations or devaluations may impact our operating results.
Fluctuations or devaluations in foreign currencies relative to the U.S. dollar can impact our revenue and our
costs of doing business and create volatility, as well as the costs of doing business of our customers.
Changes in economic and/or market conditions may impact our ability to borrow and/or cost of borrowing.
The condition of the capital markets and equity markets in general may affect the price of our common stock
and our ability to obtain financing, if necessary. If our credit rating is downgraded, it could increase borrowing costs
under credit facilities and commercial paper programs, as well as increase the cost of renewing or obtaining, or
make it more difficult to renew, obtain, or issue new debt financing.
RISKS RELATED TO OUR STOCK
The market price and trading volume of our Class A common stock may be volatile, which could result in
rapid and substantial losses for our shareholders.
The market price of our Class A common stock may be highly volatile and could be subject to wide fluctuations.
In addition, the trading volume in our Class A common stock may fluctuate and cause significant price variations to
occur. If the market price of our Class A common stock declines significantly, our shareholders may be unable to
sell their shares of our Class A common stock at or above their purchase price, if at all. We cannot assure our
shareholders that the market price of our Class A common stock will not fluctuate or decline significantly in the
Baker Hughes Company 2022 Form 10-K | 24
future. Some of the factors that could negatively affect the price of our Class A common stock or result in
fluctuations in the price or trading volume of our Class A common stock include: variations in our quarterly operating
results; failure to meet our earnings estimates; publication of research reports about us or our industry; additions or
departures of our executive officers and other key management personnel; adverse market reaction to any
indebtedness we may incur or securities we may issue in the future; actions by shareholders; changes in market
valuations of similar companies; speculation in the press or investment community; changes or proposed changes
in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and
regulations, or announcements relating to these matters; adverse publicity about our industry generally or individual
scandals, specifically; and general market and economic conditions.
Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay
acquisition attempts for us that might be considered favorable.
Our amended and restated certificate of incorporation and amended and restated bylaws may delay or prevent
a merger or acquisition that a shareholder may consider favorable by permitting our Board of Directors to issue one
or more series of preferred stock, requiring advance notice for shareholder proposals and nominations, and placing
limitations on convening shareholder meetings. These provisions may also discourage acquisition proposals, delay,
or prevent a change in control, which could harm our stock price.
Our second amended and restated certificate of incorporation designates the Court of Chancery of the
State of Delaware as the exclusive forum for certain litigation that may be initiated by our shareholders,
which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
Pursuant to our second amended and restated certificate of incorporation, unless we consent in writing to the
selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for
(1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a
fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action
asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or (4) any action
asserting a claim governed by the internal affairs doctrine. Our second amended and restated certificate of
incorporation further provides that any person or entity purchasing or otherwise acquiring any interest in shares of
our common stock is deemed to have notice of and consented to the foregoing provision. The forum selection
clause in our second amended and restated certificate of incorporation may limit our shareholders’ ability to obtain a
favorable judicial forum for disputes with us.
This exclusive forum provision applies to certain state law claims and will not apply to claims under the
Securities Act or the Exchange Act. In addition, our shareholders will not be deemed to have waived our
compliance with the federal securities laws and the rules and regulations thereunder. This choice of forum provision
may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our
directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers
and employees.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Baker Hughes Company 2022 Form 10-K | 25
ITEM 2. PROPERTIES
We own or lease numerous properties throughout the world. We consider our manufacturing plants, equipment
assembly, maintenance and overhaul facilities, grinding plants, drilling fluids and chemical processing centers, and
primary research and technology centers to be our principal properties. The following sets forth the location of our
principal owned or leased facilities for our business segments as of December 31, 2022:
Oilfield Services & Equipment:
Houston, Pasadena, and The Woodlands, Texas; Broken Arrow and Claremore,
Oklahoma - all located in the United States; Leduc, Canada; Celle, Germany;
Tananger, Norway; Aberdeen and Montrose, Scotland; Nailsea and Newcastle,
England; Macae and Niteroi, Brazil; Singapore, Singapore; Suzhou, China;
Kakinada, India; Abu Dhabi and Dubai, United Arab Emirates; Dammam and
Dhahran, Saudi Arabia; Luanda, Angola; Port Harcourt, Nigeria
Industrial & Energy Technology: Deer Park, Texas; Jacksonville, Florida; Billerica, Massachusetts; Minden,
Nevada; Longmont, Colorado; Twinsburg, Ohio - all located in the United States;
Florence, Massa, Bari, and Talamona, Italy; Le Creusot, France; Leicester and
Cramlington, England; Shannon, Ireland; Hurth and Wunstorf, Germany;
Shanghai, China; Coimbatore, India
We own or lease numerous other facilities such as service centers, blend plants, workshops and sales and
administrative offices throughout the geographic regions in which we operate. We also have a significant
investment in service vehicles, tools and manufacturing and other equipment. All of our owned properties are
unencumbered. We believe that our facilities are well maintained and suitable for their intended purposes.
ITEM 3. LEGAL PROCEEDINGS
The information with respect to Item 3. Legal Proceedings is contained in "Note 19. Commitments and
Contingencies" of the Notes to Consolidated Financial Statements in Item 8 herein.
ITEM 4. MINE SAFETY DISCLOSURES
Our barite mining operations, in support of our OFSE segment, are subject to regulation by the Federal Mine
Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning
mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this annual report.
Baker Hughes Company 2022 Form 10-K | 26
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our Class A common stock, $0.0001 par value per share, is traded on the Nasdaq Global Select Market under
the ticker symbol 'BKR'. As of February 6, 2023, there were approximately 5,946 stockholders of record.
The following table contains information about our purchases of Class A common stock equity securities during
the fourth quarter of 2022.
Issuer Purchases of Equity Securities
Total Number
of Shares
Purchased (1)
Average
Price Paid
Per Share (2)
Total Number of Shares
Purchased as Part of a
Publicly Announced Plan
or Programs (3) (4)
Maximum Dollar Value
of Shares that May Yet Be
Purchased Under the Plan
or Programs (3) (4)
Period
October 1-31, 2022
2,509,610 $
November 1-30, 2022
December 1-31, 2022
Total
869,988
10,330
3,389,928 $
23.61
30.10
28.42
25.29
2,500,857 $
839,605 $
— $
3,340,462
2,781,143,726
2,755,776,668
2,755,776,668
(1) Represents Class A common stock purchased from employees to satisfy the tax withholding obligations in connection
with the vesting of restricted stock units and shares purchased in the open market under our publicly announced
program.
(2) Average price paid for Class A common stock purchased from employees to satisfy the tax withholding obligations in
connection with the vesting of restricted stock units and shares purchased in the open market under our publicly
announced purchase program.
(3)
In October 2022, our Board of Directors authorized an increase to our repurchase program of $2 billion of additional
Class A common stock, increasing its existing repurchase authorization of $2 billion to $4 billion. During 2022, we
entered into purchase plans that complied with Rule 10b5-1 of the Exchange Act (the "10b5-1 Plans"). Under the
10b5-1 Plans, the agents repurchased a number of our Class A common stock determined under the terms of the
10b5-1 Plans each trading day based on the trading price of the stock on that day.
(4) During the three months ended December 31, 2022, we repurchased and subsequently canceled 3.3 million shares of
Class A common stock at an average price of $25.27 per share for a total of $84 million.
Baker Hughes Company 2022 Form 10-K | 27
Corporate Performance Graph
The following graph compares the yearly change in our cumulative total shareholder return on our common
stock (assuming reinvestment of dividends into common stock at the date of payment) with the cumulative total
return on the published Standard & Poor's ("S&P") 500 Stock Index, the cumulative total return on the S&P 500 Oil
and Gas Equipment and Services Index, and the Philadelphia Oil Service Index ("OSX") over the preceding five
year period. In 2022, the Company elected to include the OSX index. Although, the Company is not a component
of the OSX, this index was added because it represents a large group of companies with similar industry exposure,
many of which provide the same or similar equipment and services as the Company.
Comparison of Five-Year Cumulative Total Return
BKR, S&P 500 Stock Index, S&P 500 Oil and Gas Equipment and Services Index, and OSX
2017
2018
2019
2020
2021
2022
Baker Hughes Company ("BKR")
$ 100.00 $ 69.58 $ 85.55 $ 72.61 $ 86.38 $ 108.75
S&P 500 Stock Index
156.77
100.00
S&P 500 Oil and Gas Equipment and Services Index 100.00
87.20
Philadelphia Oil Service Index ("OSX")
61.53
100.00
125.70
64.70
54.48
191.48
52.64
38.10
148.81
41.26
31.56
95.61
58.53
54.78
The comparison of total return on investment (change in year-end stock price plus reinvested dividends)
assumes that $100 was invested on December 31, 2017 in Baker Hughes common stock, the S&P 500 Index, the
S&P 500 Oil and Gas Equipment and Services Index, and the OSX.
The corporate performance graph and related information shall not be deemed "soliciting material" or to be
"filed" with the SEC, nor shall such information be incorporated by reference into any future filing under the
Securities Act or the Exchange Act, except to the extent that Baker Hughes specifically incorporates it by reference
into such filing.
ITEM 6. [RESERVED]
Baker Hughes Company 2022 Form 10-K | 28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be
read in conjunction with the consolidated financial statements included in Item 8. Financial Statements and
Supplementary Data contained herein.
We are an energy technology company with a broad and diversified portfolio of technologies and services that
span the energy and industrial value chain. We operate through our two business segments: Oilfield Services &
Equipment ("OFSE") and Industrial & Energy Technology ("IET"). We sell products and services primarily in the
global oil and gas markets, within the upstream, midstream, and downstream segments.
EXECUTIVE SUMMARY
Baker Hughes was successful in 2022, with key commercial successes and solid margin improvements in
OFSE. Commercially in IET, orders performance in LNG and new energy hit new highs and are poised to remain
strong into 2023. In 2022, we had a record year for LNG equipment orders, and achieved significant growth in new
energy orders compared to 2021. Within OFSE, Subsea & Surface Pressure Systems also achieved a strong
orders year compared to 2021.
Operationally, our performance for 2022 was mixed. During the year, we experienced several operational
challenges across our organization most notably cost inflation, supply chain delays, impact of foreign exchange, and
the suspension of our activities in Russia. Our performance improved over the second half of 2022 as supply chain
challenges moderated, we saw increased activity primarily in OFSE, and we were able to achieve price
improvements that collectively more than offset these operational challenges.
In 2022, we generated revenue of $21.2 billion, compared to $20.5 billion in 2021. The increase in revenue was
primarily driven by higher volume in OFSE. Operating income in 2022 was $1,185 million compared to $1,310
million in 2021. The decrease in operating income was driven by higher restructuring, impairment and other
charges, partially offset by higher segment operating income in OFSE. Income before income taxes was $22 million
in 2022, and included other non-operating losses of $911 million and net interest expense of $252 million. Included
in our other non-operating loss was a $451 million loss from the sale of part of the OFSE Russia business, and
$265 million of unrealized net losses from marking our investments in ADNOC Drilling and C3 AI to fair value.
In the third quarter of 2022, we announced a reorganization of the Company to create two operating segments,
OFSE and IET. This has kicked off a major transformation effort across the organization, including key
management changes, which will fundamentally improve the way the Company operates. This reorganization is
designed to simplify and streamline our organizational structure, and create better flexibility and economies of scale
across the two operating segments. For OFSE, one area of focus will be right sizing OFSE through facility
rationalization, removing management layers, and integrating multiple functions and capabilities. For IET, we
expect commercial and technological benefits from closer integration as well as the benefit of cost out programs.
We expect these changes to improve the long-term optionality and growth opportunities for Baker Hughes as our
markets and customers continue to evolve.
Baker Hughes remains committed to a flexible capital allocation policy that balances returning cash to
shareholders and investing in growth opportunities. We increased our quarterly dividend in the fourth quarter of
2022 by one cent to $0.19 per share. For the full year of 2022, we returned a total of $1.6 billion to shareholders in
the form of dividends and share repurchases. We continue to invest in the Baker Hughes portfolio through strategic
acquisitions and early-stage new energy investments. In 2022, we made several strategic acquisitions that will
complement our current portfolio. Such acquisitions include the Power Generation division of BRUSH Group
(“BRUSH”). BRUSH is an established equipment manufacturer that specializes in electric power generation and
management for the industrial and energy sectors, which will complement the IET existing portfolio. Other
transactions include the acquisitions of Quest Integrity, which will enhance our inspection capabilities, and
AccessESP, which broadens our electrical submersible pump ("ESP") technology portfolio. New energy
investments include Mosaic Materials and NET Power. In 2022, we entered into an agreement to acquire Altus
Intervention, a leading international provider of well intervention services and downhole technology, which will
enhance OFSE's existing portfolio. The Altus transaction is expected to close in the first half of 2023. We also
Baker Hughes Company 2022 Form 10-K | 29
reached an agreement with GE for the sale of our Nexus Controls business. GE will continue to provide Baker
Hughes with GE’s MarkTM controls products currently in the Nexus Controls portfolio, and we will be the exclusive
supplier and service provider of such GE products for our oil and gas customers’ control needs. The transaction is
expected to close in mid-2023.
The invasion of Ukraine by Russia and the sanctions imposed in response to this crisis have increased the level
of economic and political uncertainty. As we announced in March 2022, we suspended any new investments for our
Russia operations. Over the course of 2022, changes to sanctions continued to make ongoing operations
increasingly complex and significantly more challenging. As a result, we took actions to suspend substantially all of
our operational activities related to Russia across the Company including suspending work on equipment and
service contracts in Russia, and we completed the sale of part of our OFSE Russia business to local management
in the fourth quarter of 2022. Russia represented approximately 2%, 5%, and 5% of our total revenue in 2022,
2021, and 2020, respectively.
As we look ahead to 2023, the global economy is expected to experience some challenges under the weight of
inflationary pressures and tightening monetary conditions. Despite recessionary pressures in some of the world’s
largest economies, we maintain a positive outlook for the energy sector. With years of under investment now being
amplified by recent geopolitical factors, global spare capacity for oil and gas has deteriorated and will likely require
years of investment growth to meet forecasted future demand. For this reason, we continue to believe that we are
in the early stages of a multi-year upturn in global activity and are poised to see a second consecutive year of
strong growth in global upstream spending in 2023.
We remain positive on the near term and long term prospects for the natural gas and LNG investment cycle.
Near term, we believe that the likely reopening of China, combined with Europe’s need to refill gas storage supplies,
will play a critical role in keeping global gas and LNG markets tight. Longer term, we remain optimistic on the
structural growth outlook for natural gas and LNG as the world looks to lower emissions and displace the
consumption of coal. In addition to the strong growth in traditional oil and gas spending, we also believe that the
Inflation Reduction Act in the U.S. and potential new legislation in Europe will support significant growth
opportunities in new energy in 2023 and beyond.
OUTLOOK
Our business is exposed to a number of macro factors, which influence our outlook and expectations given the
current volatile conditions in the industry. All of our outlook expectations are purely based on the market as we see
it today, and are subject to changing conditions in the industry.
• OFSE North America activity: We expect North American spending to continue to improve in 2023, as
compared to 2022, should commodity prices remain at current levels.
• OFSE International activity: We expect spending outside of North America to experience strong growth in
2023, as compared to 2022, should commodity prices remain at current levels.
•
IET LNG projects: We remain optimistic on the LNG market long-term and view natural gas as a transition
and destination fuel. We continue to view the long-term economics of the LNG industry as positive.
We have other businesses in our portfolio that are more correlated with various industrial metrics, including
global GDP growth. We also have businesses within our portfolio that are exposed to new energy solutions,
specifically focused around reducing carbon emissions of energy and broader industry, including hydrogen,
geothermal, carbon capture, utilization and storage, and energy storage. We expect to see continued growth in
these businesses as new energy solutions become a more prevalent part of the broader energy mix.
Overall, we believe our portfolio is well positioned to compete across the energy value chain and deliver
comprehensive solutions for our customers. We remain optimistic about the long-term economics of the oil and gas
industry, but we are continuing to operate with flexibility. Over time, we believe the world’s demand for energy will
continue to rise, and that hydrocarbons will play a major role in meeting the world's energy needs for the
foreseeable future. As such, we remain focused on delivering innovative, low-emission, and cost-effective solutions
that deliver step changes in operating and economic performance for our customers.
Baker Hughes Company 2022 Form 10-K | 30
BUSINESS ENVIRONMENT
The following discussion and analysis summarizes the significant factors affecting our results of operations,
financial condition and liquidity position as of and for the years ended December 31, 2022, 2021, and 2020, and
should be read in conjunction with the consolidated financial statements and related notes of the Company.
Our revenue is predominately generated from the sale of products and services to major, national, and
independent oil and natural gas companies worldwide, and is dependent on spending by our customers for oil and
natural gas exploration, field development and production. This spending is driven by a number of factors, including
our customers' forecasts of future energy demand and supply, their access to resources to develop and produce oil
and natural gas, their ability to fund their capital programs, the impact of new government regulations and most
importantly, their expectations for oil and natural gas prices as a key driver of their cash flows.
Oil and Natural Gas Prices
Oil and natural gas prices are summarized in the table below as averages of the daily closing prices during each
of the periods indicated.
Brent oil prices ($/Bbl) (1)
WTI oil prices ($/Bbl) (2)
Natural gas prices ($/mmBtu) (3)
2022
2021
2020
$
100.93 $
94.90
6.45
70.86 $
68.14
3.89
41.96
39.16
2.03
(1)
(2)
(3)
Energy Information Administration ("EIA") Europe Brent Spot Price per Barrel
EIA Cushing, OK WTI ("West Texas Intermediate") spot price
EIA Henry Hub Natural Gas Spot Price per million British Thermal Unit
Oil and natural gas prices increased during 2022 largely driven by supply constraints which has also been
amplified as a result of recent geopolitical events.
Outside North America, customer spending is most heavily influenced by Brent oil prices. The average Brent oil
prices increased to $100.93/Bbl in 2022 from $70.86/Bbl in 2021 and ranged from a low of $76.02/Bbl in December
2022, to a high of $133.18/Bbl in March 2022. The average Brent oil prices increased to $70.86/Bbl in 2021 from
$41.96/Bbl in 2020 and ranged from a low of $50.37/Bbl in January 2021, to a high of $85.76/Bbl in October 2021.
In North America, customer spending is highly driven by WTI oil prices, which similarly to Brent oil prices, on
average increased to $94.90/Bbl in 2022 from $68.14/Bbl in 2021, and ranged from a low of $71.05/Bbl in
December 2022, to a high of $123.64/Bbl in March 2022. WTI oil prices on average increased to $68.14/Bbl in
2021 from $39.16/Bbl in 2020, and ranged from a low of $47.47/Bbl in January 2021, to a high of $85.64/Bbl in
October 2021.
In North America, natural gas prices, as measured by the Henry Hub Natural Gas Spot Price, averaged $6.45/
mmBtu in 2022, representing a 66% increase over the prior year. Throughout the year, Henry Hub Natural Gas
Spot Prices ranged from a high of $9.85/mmBtu in August 2022, to a low of $3.46/mmBtu in November 2022.
According to the U.S. Department of Energy, working natural gas in storage at the end of 2022 was 2,891 billion
cubic feet ("Bcf"), which was 9.5%, or 304 Bcf, below the corresponding week in 2021. Henry Hub Natural Gas
Spot Price averaged $3.89/mmBtu in 2021, representing a 92% increase over the prior year. Throughout the year,
Henry Hub Natural Gas Spot Prices ranged from a high of $23.86/mmBtu in February 2021, to a low of $2.43/
mmBtu in April 2021. According to the U.S. Department of Energy, working natural gas in storage at the end of
2021 was 3,226 billion cubic feet ("Bcf"), which was 6.8%, or 234 Bcf, below the corresponding week in 2020.
Baker Hughes Company 2022 Form 10-K | 31
Baker Hughes Rig Count
The Baker Hughes rig counts are an important business barometer for the drilling industry and its suppliers.
When drilling rigs are active they consume products and services produced by the oil service industry. Rig count
trends are driven by the exploration and development spending by oil and natural gas companies, which in turn is
influenced by current and future price expectations for oil and natural gas. The counts may reflect the relative
strength and stability of energy prices and overall market activity, however, these counts should not be solely relied
on as other specific and pervasive conditions may exist that affect overall energy prices and market activity.
We have been providing rig counts to the public since 1944. We gather all relevant data through our field
service personnel, who obtain the necessary data from routine visits to the various rigs, customers, contractors and
other outside sources as necessary. We base the classification of a well as either oil or natural gas primarily upon
filings made by operators in the relevant jurisdiction. This data is then compiled and distributed to various wire
services and trade associations and is published on our website. We believe the counting process and resulting
data is reliable, however, it is subject to our ability to obtain accurate and timely information. Rig counts are
compiled weekly for the U.S. and Canada and monthly for all international rigs. Published international rig counts
do not include rigs drilling in certain locations, such as onshore China because this information is not readily
available.
Rigs in the U.S. and Canada are counted as active if, on the day the count is taken, the well being drilled has
been started, but drilling has not been completed and the well is anticipated to be of sufficient depth to be a
potential consumer of our drill bits. In international areas, rigs are counted on a weekly basis and deemed active if
drilling activities occurred during the majority of the week. The weekly results are then averaged for the month and
published accordingly. The rig count does not include rigs that are in transit from one location to another, rigging up,
being used in non-drilling activities including production testing, completion and workover, and are not expected to
be significant consumers of drill bits.
The rig counts are summarized in the table below as averages for each of the periods indicated.
North America
International
Worldwide
2022 Compared to 2021
2022
2021
2020
898
851
1,749
610
756
1,366
522
827
1,349
Overall the rig count was 1,749 in 2022, an increase of 28% as compared to 2021 due to an increase in activity
in North America and internationally. The rig count in North America increased 47% and the international rig count
increased 13% in 2022 compared to 2021.
Within North America, the increase was primarily driven by the U.S. rig count, which was up 51% on average
when compared to the same period last year, and an increase in the Canada rig count, which was up 32% on
average. Internationally, the increase in the rig count was driven by increases in the Latin America region, Africa
region, Middle East region, and Asia-Pacific region of 22%, 19%, 16%, and 8%, respectively.
2021 Compared to 2020
Overall the rig count was 1,366 in 2021, an increase of 1% as compared to 2020 due primarily to an increase in
activity in North America partially offset by declines internationally. The rig count in North America increased 17%
and the international rig count decreased 9% in 2021 compared to 2020.
Within North America, the increase was primarily driven by the Canadian rig count, which was up 48% on
average when compared to the same period last year, and an increase in the U.S. rig count, which was up 10% on
average. Internationally, the decrease in the rig count was driven primarily by decreases in the Middle East region,
Africa region, and Europe region of 21%, 10%, and 10%, respectively.
Baker Hughes Company 2022 Form 10-K | 32
RESULTS OF OPERATIONS
The discussions below relating to significant line items from our consolidated statements of income (loss) are
based on available information and represent our analysis of significant changes or events that impact the
comparability of reported amounts. Where appropriate, we have identified specific events and changes that affect
comparability or trends and, where reasonably practicable, have quantified the impact of such items. In addition,
the discussions below for revenue and cost of revenue are on a total basis as the business drivers for product sales
and services are similar. All dollar amounts in tabulations in this section are in millions of dollars, unless otherwise
stated. Certain columns and rows may not add due to the use of rounded numbers.
Our results of operations are evaluated by the Chief Executive Officer on a consolidated basis as well as at the
segment level. The performance of our operating segments is primarily evaluated based on segment operating
income (loss), which is defined as income (loss) before income taxes and before the following: net interest expense,
net other non-operating income (loss), corporate expenses, restructuring, impairment and other charges, goodwill
and inventory impairments, separation related costs, and certain gains and losses not allocated to the operating
segments.
In evaluating the segment performance, the Company uses the following:
Volume: Volume is the increase or decrease in products and/or services sold period-over-period excluding the
impact of foreign exchange and price. The volume impact on profit is calculated by multiplying the prior period profit
rate by the change in revenue volume between the current and prior period. It also includes price, defined as the
change in sales price for a comparable product or service period-over-period and is calculated as the period-over-
period change in sales prices of comparable products and services.
Foreign Exchange ("FX"): FX measures the translational foreign exchange impact, or the translation impact of
the period-over-period change on sales and costs directly attributable to change in the foreign exchange rate
compared to the U.S. dollar. FX impact is calculated by multiplying the functional currency amounts (revenue or
profit) with the period-over-period FX rate variance, using the average exchange rate for the respective period.
(Inflation)/Deflation: (Inflation)/deflation is defined as the increase or decrease in direct and indirect costs of
the same type for an equal amount of volume. It is calculated as the year-over-year change in cost (i.e. price paid)
of direct material, compensation and benefits, and overhead costs.
Productivity: Productivity is measured by the remaining variance in profit, after adjusting for the period-over-
period impact of volume and price, foreign exchange and (inflation)/deflation as defined above. Improved or lower
period-over-period cost productivity is the result of cost efficiencies or inefficiencies, such as cost decreasing or
increasing more than volume, or cost increasing or decreasing less than volume, or changes in sales mix among
segments. This also includes the period-over-period variance of transactional foreign exchange, aside from those
foreign currency devaluations that are reported separately for business evaluation purposes.
Orders and Remaining Performance Obligations
Our consolidated statements of income (loss) displays sales and costs of sales in accordance with SEC
regulations under which “goods” is required to include all sales of tangible products and “services” must include all
other sales, including other services activities. For the amounts shown below, we distinguish between “equipment”
and “product services,” where product services refers to sales under product services agreements, including sales
of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring,
maintenance and repairs), which is an important part of our operations. We refer to “product services” simply as
“services” within Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Orders: We recognized orders of $26.8 billion, $21.7 billion, and $20.7 billion in 2022, 2021, and 2020,
respectively. We recognized OFSE orders of $14.1 billion, $11.8 billion, and $12.3 billion and IET orders of $12.7
billion, $9.9 billion, and $8.4 billion in 2022, 2021 and 2020, respectively. Within IET, Gas Technology Equipment
orders were $6.4 billion, $3.9 billion, $3.0 billion, and Gas Technology Services orders were $3.0 billion, $2.9 billion,
and $2.6 billion in 2022, 2021 and 2020, respectively.
Baker Hughes Company 2022 Form 10-K | 33
Remaining Performance Obligations ("RPO"): As of December 31, 2022 and 2021, the aggregate amount of
the transaction price allocated to the unsatisfied (or partially unsatisfied) performance obligations was $27.8 billion
and $23.6 billion, respectively. As of December 31, 2022 and 2021, OFSE remaining performance obligations
totaled $2.6 billion and $2.0 billion, and IET remaining performance obligations totaled $25.3 billion and $21.5
billion, respectively.
Revenue and Operating Income
Summarized financial information for the Company's segments is shown in the following tables.
Year Ended December 31,
$ Change
2022
2021
2020
From 2021 to
2022
From 2020 to
2021
Revenue:
Well Construction
Completions, Intervention & Measurements
Production Solutions
Subsea & Surface Pressure Systems
Oilfield Services & Equipment
Gas Technology - Equipment
Gas Technology - Services
Total Gas Technology
Condition Monitoring
Inspection
Pumps, Valves & Gears
PSI & Controls
Total Industrial Technology
Industrial & Energy Technology
Total
$
3,854 $
3,301 $
3,257 $
3,559
3,587
2,230
3,106
3,135
2,486
3,614
3,269
2,844
13,229
12,028
12,984
2,560
2,441
5,002
545
995
826
559
2,925
7,926
2,916
2,700
5,616
562
949
801
546
2,857
8,473
2,421
2,475
4,896
581
865
809
570
2,824
7,721
$
21,156 $
20,502 $
20,705 $
553 $
453
452
(256)
1,201
(356)
(259)
(614)
(17)
46
25
13
68
(547)
654 $
44
(508)
(134)
(358)
(956)
495
225
720
(19)
84
(8)
(23)
34
754
(203)
The following table presents Oilfield Services & Equipment revenue by geographic region:
North America
Latin America
Europe/CIS/Sub-Saharan Africa
Middle East/Asia
Oilfield Services & Equipment
North America
International
Year Ended December 31,
$ Change
2022
2021
2020
From 2021 to
2022
From 2020 to
2021
$
3,764 $
2,904 $
3,107 $
860 $
2,099
2,483
4,883
1,681
2,865
4,579
1,447
2,846
5,584
418
(382)
304
13,229 $
12,028 $
12,984 $
1,201 $
3,764 $
9,465
2,904 $
9,124
3,107 $
9,877
860 $
341
$
$
(203)
234
19
(1,005)
(956)
(203)
(753)
Baker Hughes Company 2022 Form 10-K | 34
The following table presents segment operating income through to net loss for the Company.
Segment operating income:
Oilfield Services & Equipment
Industrial & Energy Technology
Total segment operating income
Corporate
Inventory impairment (1)
Goodwill impairment
Restructuring, impairment and other
Separation related
Operating income (loss)
Other non-operating income (loss), net
Interest expense, net
Income (loss) before income taxes
Provision for income taxes
Net loss
Year Ended December 31,
$ Change
2022
2021
2020
From 2021 to
2022
From 2020 to
2021
$
1,201 $
830 $
1,135
2,336
(416)
(31)
—
(682)
(23)
1,177
2,006
(429)
—
—
(209)
(60)
506 $
998
1,504
(464)
(246)
(14,773)
(1,866)
(134)
1,185
1,310
(15,978)
(911)
(252)
22
(600)
(583)
(299)
428
(758)
1,040
(264)
(15,202)
(559)
371 $
(42)
330
13
(31)
—
(473)
37
(125)
(328)
47
(406)
158
324
178
502
35
246
14,773
1,657
74
17,289
(1,623)
(35)
15,630
(199)
$
(578) $
(330) $
(15,761) $
(248) $
15,431
(1)
Inventory impairments are reported in "Cost of goods sold" of the consolidated statements of income (loss).
Fiscal Year 2022 to Fiscal Year 2021
Revenue in 2022 was $21,156 million, an increase of $654 million, or 3%, from 2021. This increase in revenue
was largely a result of increased activity in OFSE, partially offset by a decline in IET. OFSE increased $1,201
million and IET decreased $547 million.
Total segment operating income in 2022 was $2,336 million, an increase of $330 million, or 16%, from 2021.
The increase was primarily driven by OFSE, which increased $371 million, partially offset by IET which decreased
$42 million.
Oilfield Services & Equipment
OFSE 2022 revenue was $13,229 million, an increase of $1,201 million, or 10%, from 2021, primarily as a result
of increased activity in North America and internationally, as evidenced by an increase in the global rig count. North
America revenue was $3,764 million in 2022, an increase of $860 million from 2021. International revenue was
$9,465 million in 2022, an increase of $341 million from 2021, primarily driven by growth in Latin America and the
Middle East, partially offset by declines in the Russia Caspian and Europe regions. The year-over-year revenue
was reduced by the removal of the subsea drilling systems ("SDS") business from the consolidated OFSE
operations in the fourth quarter of 2021 due to the formation of a joint venture.
OFSE 2022 segment operating income was $1,201 million, compared to $830 million in 2021. The increase
was primarily driven by higher volume and price, partially offset by logistics and commodity cost inflation.
Industrial & Energy Technology
IET 2022 revenue was $7,926 million, a decrease of $547 million, or 6%, from 2021. The decrease was
primarily driven by lower volume in both Gas Technology Equipment and Gas Technology Services, the impact from
foreign currency translation, and supply chain delays in Gas Technology Services, partially offset by higher volume
in Industrial Technology.
Baker Hughes Company 2022 Form 10-K | 35
IET 2022 segment operating income was $1,135 million, compared to $1,177 million in 2021. The decrease in
profitability was driven by lower volume, unfavorable foreign currency translation impact, higher research and
development costs, and inflationary pressure, partially offset by favorable business mix and higher pricing in certain
product lines.
Corporate
In 2022, corporate expenses were $416 million, a decrease of $13 million compared to 2021, primarily driven by
cost efficiencies and past restructuring actions.
Inventory Impairment
In 2022, we recorded inventory impairments of $31 million primarily in IET as part of suspending our Russia
operations. Inventory impairments are reported in the "Cost of goods sold" caption of the consolidated statements
of income (loss). There were no inventory impairments during 2021.
Restructuring, Impairment and Other
In 2022, we recognized $682 million of restructuring, impairment and other charges, primarily related to the
suspension of substantially all of our operations in Russia, as well as, costs incurred to facilitate our reorganization
into two segments and the implementation of certain projects in our OFSE segment to optimize their global footprint.
In addition, we impaired certain long-lived assets in our OFSE segment for the subsea production systems ("SPS")
business due to a decrease in the estimated future cash flows driven by a decline in our long-term market outlook
for this business. In 2021, we recognized $209 million in restructuring, impairment and other charges. The charges
in 2021 primarily related to the initiatives in our OFSE segment that were the continuation of our overall strategy to
right-size our structural costs.
Separation Related
We recorded $23 million of separation related costs in 2022, a decrease of $37 million from the prior year.
Costs relate to the activities for the separation from GE, primarily related to information technology. Separation
activities were substantially completed by the end of 2022.
Other Non-Operating Loss, Net
In 2022, we recorded $911 million of other non-operating loss, an increase of $328 million from the prior year,
primarily due to the loss of $451 million from the sale of part of the OFSE business in Russia. We also recorded
$265 million of unrealized losses related to marking our investments in C3 AI and ADNOC to fair value. Additionally,
in December 2022, the Company, BHH LLC and GE entered into an agreement which resulted in the termination of
the Tax Matters Agreement ("TMA"), and as a result, we recorded a charge of $81 million, of which $21 million was
a cash payment to GE as a net settlement of claims asserted under the TMA. See "Note 11. Income Taxes" for
further information.
Interest Expense, Net
In 2022, we incurred interest expense, net of interest income, of $252 million, a decrease of $47 million from the
prior year, driven primarily by higher interest income, and lower interest expense due to $28 million of non-recurring
costs in 2021 associated with the refinancing of our senior notes.
Income Taxes
In 2022, our provision for income taxes was $600 million. The difference between the U.S. statutory tax rate of
21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances,
restructuring charges for which a majority has no tax benefit, and earnings in jurisdictions with tax rates higher than
the U.S.
Baker Hughes Company 2022 Form 10-K | 36
In 2021, our provision for income taxes was $758 million. The difference between the U.S. statutory tax rate of
21% and the effective tax rate is primarily related to losses with no tax benefit due to valuation allowances and
changes in unrecognized tax benefits related to uncertain tax positions.
Fiscal Year 2021 to Fiscal Year 2020
Revenue in 2021 was $20,502 million, a decrease of $203 million, or 1%, from 2020. This decrease in revenue
was largely a result of decreased activity in OFSE, partially offset by an increase in IET. OFSE decreased $956
million and IET increased $754 million.
Total segment operating income in 2021 was $2,006 million, an increase of $502 million, or 33%, from 2020.
The increase was driven by OFSE, which increased $324 million, and IET, which increased $178 million.
Oilfield Services & Equipment
OFSE 2021 revenue was $12,028 million, a decrease of $956 million, or 7%, from 2020, primarily as a result of
decreased international activity in 2021 compared to 2020, as evidenced by a decline in the corresponding rig
count, and, to a lesser extent, decreased activity in North America, and supply chain constraints that occurred in the
second half of 2021. International revenue was $9,124 million in 2021, a decrease of $753 million from 2020,
primarily driven by declines in the Middle East, partially offset by growth in Latin America. North America revenue
was $2,904 million in 2021, a decrease of $203 million from 2020. The decrease in revenue was also driven by the
disposition of the surface pressure control flow business in the fourth quarter of 2020, and the removal of SDS from
consolidated OFSE operations in the fourth quarter of 2021 due to the formation of a joint venture.
OFSE 2021 segment operating income was $830 million, compared to $506 million in 2020. The increase was
primarily driven by higher cost productivity as a result of cost efficiencies and restructuring actions. Additional
drivers were increases in price in certain product lines, partially offset by lower volume.
Industrial & Energy Technology
IET 2021 revenue was $8,473 million, an increase of $754 million, or 10%, from 2020. The increase was
primarily driven by higher volume for both Gas Technology Equipment and Gas Technology Services, partially offset
by supply chain constraints that impacted product deliveries, mainly in the Industrial Technology product lines.
IET 2021 segment operating income was $1,177 million, compared to $998 million in 2020. The increase in
profitability was driven primarily by higher volume, price, and productivity, partially offset by unfavorable business
mix.
Corporate
In 2021, corporate expenses were $429 million, a decrease of $35 million compared to 2020, primarily driven by
lower expenses as a result of cost out programs and restructuring actions.
Inventory Impairment
There were no inventory impairments during 2021. In 2020, we recorded inventory impairments of $246 million
primarily related to our OFSE segment as a result of certain restructuring activities initiated by the Company.
Charges for inventory impairments are reported in the "Cost of goods sold" caption of the consolidated statements
of income (loss).
Goodwill Impairment
There were no goodwill impairments during 2021. During the first quarter of 2020, the Company’s market
capitalization declined significantly driven by current macroeconomic and geopolitical conditions including the
decrease in demand caused by the COVID-19 pandemic and collapse of oil prices driven by both surplus production
and supply. Based on these events, we concluded that a triggering event occurred and we performed an interim
quantitative impairment test as of March 31, 2020. Based upon the results of the impairment test, we recognized a
Baker Hughes Company 2022 Form 10-K | 37
goodwill impairment charge of $14,773 million during the first quarter of 2020. There were no other goodwill
impairments during 2020.
Restructuring, Impairment and Other
In 2021, we recognized $209 million in restructuring, impairment and other charges. The charges in 2021
primarily relate to the initiatives in our OFSE segment that are the continuation of our overall strategy to right-size
our structural costs. In 2020, we recognized $1,866 million in restructuring, impairment and other charges. These
charges primarily related to the restructuring plan announced in the first quarter of 2020, which included product line
rationalization actions, headcount reductions in certain geographical locations, and other initiatives to right-size
operations for anticipated activity levels and market conditions.
Separation Related
We recorded $60 million of separation related costs in 2021, a decrease of $74 million from the prior year,
largely driven by a reduction in the ongoing activities for the separation from GE, primarily related to information
technology.
Other Non-Operating Income/(Loss), Net
In 2021, we recorded $583 million of other non-operating loss. Costs in 2021 include an unrealized loss of
$1,085 million from marking our investment in C3 AI to fair value, partially offset by an unrealized gain of $241
million from marking our investment in ADNOC Drilling to fair value, by the reversal of $121 million of current
accruals due to the settlement of certain legal matters, and by income of $121 million for liabilities previously
expected to be recoverable as they were indemnified under the TMA with GE. This income from indemnified
liabilities has an offset in the "Provision for income taxes" caption in our consolidated statements of income (loss).
In 2020, we recorded $1,040 million of other non-operating income. Included in this amount was an unrealized
gain of $1,417 million related to marking our investment in C3 AI to fair value, partially offset by losses of $353
million for the sale of two product lines in OFSE, the rod lift systems business and the surface pressure control flow
business.
Interest Expense, Net
In 2021, we incurred net interest expense of $299 million, an increase of $35 million from the prior year,
primarily driven by higher interest expense, mainly related to $28 million of costs associated with the refinancing of
our senior notes due December 2022, and lower interest income.
Income Taxes
In 2021, our income tax expense was $758 million, an increase of $199 million, from $559 million in 2020. The
increase was primarily due to tax expense related to unrecognized tax benefits and the geographical mix of
earnings. Our 2021 income tax expense included $121 million that we previously expected to be recoverable as it
related to liabilities indemnified under the TMA with GE. This tax expense has an offset in the "Other non-operating
income (loss), net" caption in our consolidated statements of income (loss).
COMPLIANCE
In the conduct of all of our activities, we are committed to maintaining the core values of our Company, as well
as high safety, ethical, and quality standards as also reported in our Quality Management System ("QMS"). We
believe such a commitment is integral to running a sound, successful, and sustainable business. We devote
significant resources to maintain a comprehensive global ethics and compliance program ("Compliance Program")
which is designed to prevent, detect, and appropriately respond to any potential violations of the law, the Code of
Conduct, and other Company policies and procedures.
Baker Hughes Company 2022 Form 10-K | 38
Highlights of our Compliance Program include the following:
•
Comprehensive internal policies over such areas as anti-bribery; travel, entertainment, gifts and charitable
donations to government officials and other parties; payments to commercial sales representatives; and, the
use of non-U.S. police or military organizations for security purposes. In addition, there are policies and
procedures to address customs requirements, visa processing risks, export and re-export controls,
economic sanctions, anti-money laundering and anti-boycott laws.
• Global and independent structure of Chief Compliance Officer and other compliance professionals providing
compliance advice, customized training and governance, as well as investigating allegations across all
regions and countries where we do business.
•
•
•
•
•
•
•
•
•
•
Comprehensive employee compliance training program that combines instructor-led and web-based
training modules tailored to the key risks that employees face on an ongoing basis.
Due diligence and monitoring procedures for third parties who conduct business on our behalf, including
channel partners (sales representatives, distributors, resellers), and administrative service providers.
Due diligence procedures for acquisition activities.
Specifically tailored compliance risk assessments and audits focused on country and third party risk.
Compliance Review Board comprised of senior officers of the Company that meets quarterly to monitor
effectiveness of the Compliance Program, as well as segment compliance review boards that meet
quarterly.
Technology to monitor and report on compliance matters, including an internal investigations management
system, a conflict of interest reporting and management system, a web-based anti-boycott reporting tool,
global trade management systems and comprehensive watch list screening.
Data privacy compliance policies and procedures to ensure compliance with applicable data privacy
requirements.
A compliance program designed to create an “Open Reporting Environment” where employees are
encouraged to report any ethics or compliance matter without fear of retaliation, including a global network
of trained employee ombudspersons, and a worldwide, 24-hour business helpline operated by a third party
and available in approximately 200 languages.
Centralized finance organization with company-wide policies.
Anti-corruption audits of high-risk countries, as well as risk-based compliance audits of third parties.
• We have region-specific processes and procedures for management of HR related issues, including pre-
hire screening of employees; a process to screen existing employees prior to promotion into select roles
where they may be exposed to finance and/or corruption-related risks; and implementation of a global new
hire training module which includes compliance training for all employees.
LIQUIDITY AND CAPITAL RESOURCES
Our objective in financing our business is to maintain sufficient liquidity, adequate financial resources, and
financial flexibility in order to fund the requirements of our business. We continue to maintain solid financial strength
and liquidity. At December 31, 2022, we had cash and cash equivalents of $2.5 billion compared to $3.9 billion at
December 31, 2021.
In the U.S. we held cash and cash equivalents of approximately $0.6 billion and $1.6 billion and outside the U.S.
of approximately $1.9 billion and $2.2 billion as of December 31, 2022 and 2021, respectively. A substantial portion
of the cash held outside the U.S. at December 31, 2022 has been reinvested in active non-U.S. business
operations. If we decide at a later date to repatriate those funds to the U.S., we may incur other additional taxes
that would not be significant to the total tax provision.
Baker Hughes Company 2022 Form 10-K | 39
We have a $3 billion committed unsecured revolving credit facility ("the Credit Agreement") with commercial
banks maturing in December 2024. The Credit Agreement contains certain customary representations and
warranties, certain customary affirmative covenants and certain customary negative covenants. Upon the
occurrence of certain events of default, our obligations under the Credit Agreement may be accelerated. Such
events of default include payment defaults to lenders under the Credit Agreement and other customary defaults. No
such events of default have occurred. In addition, we have a commercial paper program with authorization up to $3
billion under which we may issue from time to time commercial paper with maturities of no more than 397 days. At
December 31, 2022 and 2021, there were no borrowings under the Credit Agreement or the commercial paper
program.
Certain Senior Notes contain covenants that restrict our ability to take certain actions. See "Note 9. Borrowings"
of the Notes to Consolidated Financial Statements in this Annual Report for further details. At December 31, 2022,
we were in compliance with all debt covenants. Our next debt maturity is December 2023.
We continuously review our liquidity and capital resources. If market conditions were to change, for instance
due to the uncertainty created by geopolitical events, a global pandemic or a significant decline in oil and gas prices,
and our revenue was reduced significantly or operating costs were to increase significantly, our cash flows and
liquidity could be negatively impacted. Additionally, it could cause the rating agencies to lower our credit ratings.
There are no ratings triggers that would accelerate the maturity of any borrowings under our committed credit
facility; however, a downgrade in our credit ratings could increase the cost of borrowings under the credit facility and
could also limit or preclude our ability to issue commercial paper. Should this occur, we could seek alternative
sources of funding, including borrowing under the credit facility.
During the year ended December 31, 2022, we dispersed cash to fund a variety of activities including certain
working capital needs, capital expenditures, the payment of dividends, repurchases of our common stock, and
distributions to noncontrolling interests.
Cash Flows
Cash flows provided by (used in) each type of activity were as follows for the years ended December 31:
(In millions)
Operating activities
Investing activities
Financing activities
Operating Activities
2022
2021
2020
$
1,888 $
(1,564)
(1,592)
2,374 $
(463)
(2,143)
1,304
(618)
225
Cash flows from operating activities generated cash of $1,888 million, $2,374 million, and $1,304 million for the
years ended December 31, 2022, 2021, and 2020, respectively.
Our largest source of operating cash is payments from customers, of which the largest component is collecting
cash related to our sales of products and services including advance payments or progress collections for work to
be performed. The primary use of operating cash is to pay our suppliers, employees, tax authorities and others for
a wide range of goods and services.
In 2022, cash generated from operating activities were primarily driven by net losses adjusted for certain
noncash items (including depreciation, amortization, loss on business dispositions, stock based compensation cost,
loss on equity securities, and the impairment of certain assets). Working capital, which includes contract and other
deferred assets, generated cash of $122 million in 2022 primarily due to strong progress collections on equipment
contracts and an increase in accounts payable, partially offset by the increase in receivables and inventory as we
build for revenue growth.
In 2021, working capital generated $480 million of cash primarily due to accounts payable, inventories and
contract and other deferred assets partially offset by accounts receivable and progress collections, as we continued
to make progress on improving our working capital processes. Restructuring and GE separation related payments
Baker Hughes Company 2022 Form 10-K | 40
were $175 million on a net basis in 2021 and included the proceeds from the disposal of certain facilities, which are
reflected below in investing activities.
In 2020, working capital generated $216 million of cash primarily due to receivables and positive progress
collections partially offset by accounts payable. Restructuring and GE separation related payments were $670
million in 2020.
Investing Activities
Cash flows from investing activities used cash of $1,564 million, $463 million, and $618 million for the years
ended December 31, 2022, 2021, and 2020, respectively.
Our principal recurring investing activity is the funding of capital expenditures to ensure that we have the
appropriate levels and types of machinery and equipment in place to generate revenue from operations.
Expenditures for capital assets totaled $989 million, $856 million, and $974 million for 2022, 2021, and 2020,
respectively, partially offset by cash flows from the sale of property, plant and equipment of $217 million, $315
million, and $187 million in 2022, 2021, and 2020, respectively. Proceeds from the disposal of assets are primarily
related to equipment that was lost-in-hole, predominantly in OFSE, and to property, machinery and equipment no
longer used in operations that was sold throughout the period.
In 2022, we paid $845 million for both acquisitions and investments in business interests. We completed
several acquisitions during 2022 including BRUSH Power Generation, Quest Integrity, AccessESP, and Mosaic
Materials. The total cash paid, net of cash acquired, for acquisitions was $767 million, and we used cash on hand
to fund these transactions.
In 2021, we contributed our SDS business to create a joint venture and received as consideration 50% of the
shares of the joint venture, cash of $70 million, and a promissory note of $80 million. In 2020, we received
proceeds of $187 million primarily from the sale of our rod lift systems and our surface pressure control flow
businesses.
In 2021, we invested $266 million to add capabilities to our new energy and industrial asset management
offerings through the acquisition of business interests in Augury, Ekona Power, Electrochaea, and the acquisition of
ARMS Reliability, among others. Also in 2021, we sold approximately 2.2 million C3 AI Shares and received
proceeds of $145 million, which is included in other investing activities.
Financing Activities
Cash flows from financing activities used cash of $1,592 million, $2,143 million, and generated cash of $225
million for the years ended December 31, 2022, 2021, and 2020, respectively.
We had net repayments of short-term debt of $28 million, $41 million, and $204 million and long-term debt of nil,
$1,313 million, and $42 million in 2022, 2021, and 2020, respectively. The repayment of long-term debt in 2021 was
primarily driven by the early repayment of our 2.773% Senior Notes due December 2022 ("the 2022 Notes") with a
principal amount of $1,250 million. In addition, a charge of $28 million related to the early redemption was recorded
within "Interest expense, net" in our consolidated statements of income (loss).
In 2022, we increased our quarterly dividend by one cent to $0.19 per share during the fourth quarter. We paid
dividends of $726 million, $592 million, and $488 million to our Class A stockholders, and we made distributions of
$17 million, $157 million, and $256 million to GE in 2022, 2021, and 2020, respectively.
In 2022, our Board of Directors authorized an increase to our repurchase program of $2 billion of additional
Class A common stock and LLC units for each of the Company and BHH LLC, respectively, increasing its existing
repurchase authorization of $2 billion to $4 billion. During 2022, the Company and BHH LLC repurchased and
canceled 29.7 million shares of Class A common stock and LLC Units, respectively, for a total of $828 million.
In 2021, we received proceeds from the issuance of $650 million aggregate principal amount of 1.231% Senior
Notes due December 2023 and $600 million aggregate principal amount of 2.061% Senior Notes due December
Baker Hughes Company 2022 Form 10-K | 41
2026. In 2020, we had proceeds from the issuance of $500 million aggregate principal amount of 4.486% Senior
Notes due May 2030.
In 2021, we repaid $832 million (£600 million) of commercial paper originally issued in 2020 ($737 million at
date of issuance) under the COVID Corporate Financing Facility established by the Bank of England.
During 2021, the Company and BHH LLC repurchased and canceled 17.6 million shares of Class A common
stock and LLC Units, respectively, for a total of $434 million.
Cash Requirements
We believe cash on hand, cash flows from operating activities, the available revolving credit facility, access to
both our commercial paper program or our uncommitted lines of credit, and availability under our existing shelf
registrations of debt will provide us with sufficient capital resources and liquidity in the short-term and long-term to
manage our working capital needs, meet contractual obligations, fund capital expenditures and dividends, repay
debt, repurchase our common stock, and support the development of our short-term and long-term operating
strategies. When necessary, we issue commercial paper or other short-term debt to fund cash needs in the U.S. in
excess of the cash generated in the U.S.
Our capital expenditures can be adjusted and managed by us to match market demand and activity levels.
Based on current market conditions, capital expenditures in 2023 will be made at a rate that we estimate would
equal up to 5% of annual revenue. The expenditures are expected to be used primarily for normal, recurring items
necessary to support our business. We also anticipate making income tax payments in the range of $500 million to
$550 million in 2023.
Contractual Obligations and Commitments
Our material cash commitments from known contractual and other obligations consist primarily of obligations for
long-term debt and related interest, leases for property and equipment, and purchase obligations as part of normal
operations. Certain amounts included in our contractual obligations as of December 31, 2022 are based on our
estimates and assumptions about these obligations, including their duration, anticipated actions by third parties and
other factors.
See “Note 9. Borrowings” of the Notes to Consolidated Financial Statements in Item 8 herein for information
regarding scheduled maturities of our long-term debt. See “Note 8. Leases” of the Notes to Consolidated Financial
Statements in Item 8 herein for information regarding scheduled maturities of our operating leases.
As of December 31, 2022, we had expected cash payments for estimated interest on our long-term debt and
finance lease obligations of $267 million payable within the next twelve months and $2,936 million payable
thereafter.
As of December 31, 2022, we had purchase obligations of $1,584 million payable within the next twelve months
and $907 million payable thereafter. Our purchase obligations include expenditures for capital assets for 2023 as
well as agreements to purchase goods or services or licenses that are enforceable and legally binding and that
specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price
provisions; and the approximate timing of the transaction.
Due to the uncertainty with respect to the timing of potential future cash outflows associated with our uncertain
tax positions, we are unable to make reasonable estimates of the period of cash settlement, if any, to the respective
taxing authorities. Therefore, $665 million in uncertain tax positions, including interest and penalties, have been
excluded from the contractual obligations discussed above. See "Note 11. Income Taxes" of the Notes to
Consolidated Financial Statements in Item 8 herein for further information.
Baker Hughes Company 2022 Form 10-K | 42
Other factors affecting liquidity
Customer receivables: In line with industry practice, we may bill our customers for services provided in arrears
dependent upon contractual terms. In a challenging economic environment, we may experience delays in the
payment of our invoices due to customers' lower cash flow from operations or their more limited access to credit
markets. While historically there have not been material non-payment events, we attempt to mitigate this risk
through working with our customers to restructure their debts. A customer's failure or delay in payment could have a
material adverse effect on our short-term liquidity and results from operations. As of December 31, 2022, 15% of
our gross customer receivables were from customers in the U.S. and 11% were from customers in Mexico. As of
December 31, 2021, 13% of our gross customer receivables were from customers in the U.S and 12% were from
customers in Mexico.
International operations: Our cash that is held outside the U.S. is 77% of the total cash balance as of
December 31, 2022. We may not be able to use this cash quickly and efficiently due to exchange or cash controls
that could make it challenging. As a result, our cash balance may not represent our ability to quickly and efficiently
use this cash.
Supply chain finance programs: Under supply chain finance programs, administered by a third party, our
suppliers are given the opportunity to sell receivables from us to participating financial institutions at their sole
discretion at a rate that leverages our credit rating and thus might be more beneficial to our suppliers. Our
responsibility is limited to making payment on the terms originally negotiated with our supplier, regardless of
whether the supplier sells its receivable to a financial institution. The range of payment terms we negotiate with our
suppliers is consistent, irrespective of whether a supplier participates in the program. These liabilities continue to
be presented as accounts payable in our consolidated statements of financial position and reflected as cash flow
from operating activities when settled. We do not believe that changes in the availability of supply chain financing
programs would have a material impact on our liquidity.
CRITICAL ACCOUNTING ESTIMATES
An accounting policy is deemed to be critical if the nature of the estimate or assumption it incorporates is
subject to a material level of judgment related to matters that are highly uncertain and changes in those estimates
and assumptions are reasonably likely to materially impact our consolidated financial statements. These estimates
reflect our best judgment about current, and for some estimates, future, economic and market conditions and their
potential effects based on information available as of the date of these financial statements. If these conditions
change from those expected, it is reasonably possible that the judgments and estimates described below could
change, which may result in future impairments of goodwill, or the establishment of valuation allowances on
deferred tax assets and increased tax liabilities, among other effects. Also, see "Note 1. Summary of Significant
Accounting Policies" of the Notes to Consolidated Financial Statements in Item 8 herein, which discusses our most
significant accounting policies.
The Audit Committee of our Board of Directors has reviewed our critical accounting estimates and the
disclosure presented below. During the past three fiscal years, we have not made any material changes in the
methodology used to establish the critical accounting estimates, and we believe that the following are the critical
accounting estimates used in the preparation of our consolidated financial statements for the year ended
December 31, 2022. There are other items within our consolidated financial statements that require estimation and
judgment, but they are not deemed critical as defined above.
Revenue Recognition on Long-Term Product Services Agreements
We have long-term service agreements with our customers within our IET segment. These agreements
typically require us to maintain assets sold to the customer over a defined contract term. These agreements have
average contract terms of greater than 10 years. From time to time, these contract terms may be extended through
contract modifications or amendments, which may result in revisions to future billing and cost estimates. Revenue
recognition on long-term product services agreements requires estimates of both customer payments and the costs
to perform required maintenance services over the contract term. We recognize revenue on an over time basis
using input method to measure our progress toward completion at the estimated margin rate of the contract.
Baker Hughes Company 2022 Form 10-K | 43
To develop our billings estimates, we consider the number of billable events that will occur based on estimated
utilization of the asset under contract, over the life of the contract term. This estimated utilization will consider both
historical and market conditions, asset retirements and new product introductions, if applicable.
To develop our cost estimates, we consider the timing and extent of maintenance and overhaul events,
including the amount and cost of labor, spare parts and other resources required to perform the services. In
developing our cost estimates, we utilize a combination of our historical cost experience and expected cost
improvements. Cost improvements are only included in future cost estimates after savings have been observed in
actual results or proven effective through an extensive regulatory or engineering approval process.
We routinely review the estimates used in our product services agreements and regularly revise them to adjust
for changes. These revisions are based on objectively verifiable information that is available at the time of the
review. We gain insight into expected future utilization and cost trends, as well as credit risk, through our
knowledge of the equipment installed and the close interaction with our customers through supplying critical
services and parts over extended periods.
Revisions to cost or billing estimates may affect a product services agreement’s total estimated profitability
resulting in an adjustment of earnings; such adjustments generated earnings of $20 million, $14 million and $17
million for the three years ended December 31, 2022, 2021 and 2020, respectively. We provide for probable losses
when they become evident. Cash billings collected on these contracts were approximately $0.7 billion and $0.6
billion during the years ended December 31, 2022 and 2021, respectively. Our contracts (on average) are
approximately 18% complete based on costs incurred to date and our estimate of future costs.
Revenue Recognition on Sale of Customized Equipment
We recognize revenue on agreements for sales of equipment manufactured to unique customer specifications
including long-term construction projects, on an over time basis utilizing cost inputs as the measurement criteria in
assessing the progress toward completion. Our estimation of the total costs required to fulfill our promise to a
customer is generally based on our history of manufacturing similar assets for customers. This estimation of cost is
critical to our revenue recognition process and is updated routinely to reflect changes in quantity or cost of the
inputs. In certain projects, the underlying technology or promise to the customer is unique to what we have
historically promised and reliably estimating the total cost to fulfill the promise to the customer requires a significant
level of judgment. We provide for potential losses on any of these agreements when it is probable that we will incur
the loss. The total revenue recognized for the sale of equipment on an over time basis during the twelve months
ended December 31, 2022, 2021, and 2020 was $4.2 billion, $4.8 billion, and $4.6 billion, respectively.
Goodwill and Other Identified Intangible Assets
We perform an annual impairment test of goodwill on a qualitative or quantitative basis for each of our reporting
units as of July 1, or more frequently when circumstances indicate an impairment may exist at the reporting unit
level. When performing the annual impairment test we have the option of first performing a qualitative assessment
to determine the existence of events and circumstances that would lead to a determination that it is more likely than
not that the fair value of a reporting unit is less than its carrying amount. If such a conclusion is reached, we would
then be required to perform a quantitative impairment assessment of goodwill. A quantitative assessment for the
determination of impairment is made by comparing the carrying amount of each reporting unit with its fair value.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates
and assumptions and typically requires analysis of discounted cash flows and other market information, such as
trading multiples, and comparable transactions. Cash flow analysis requires judgment regarding many factors, such
as management’s projections of future cash flows, weighted-average cost of capital, and long-term growth rates.
Market information requires judgmental selection of relevant market comparables. We assess the valuation
methodology based upon the relevance and availability of the data at the time the valuation is performed. Our
estimates are based upon assumptions believed to be reasonable but which are inherently uncertain, and actual
results may differ from those assumed in our analysis. The determination of whether goodwill is impaired involves a
significant level of judgment in these assumptions, and changes in our forecasts, business strategy, government
regulations, or economic or market conditions could significantly impact these judgments, potentially decreasing the
fair value of one or more reporting units. Any resulting impairment charges could have a material impact on our
results of operations.
Baker Hughes Company 2022 Form 10-K | 44
Income Taxes
Our effective tax rate is based on our income, statutory tax rates, and differences between tax laws and U.S.
GAAP in various jurisdictions. Tax laws are complex and subject to different interpretations by the taxpayer and
respective governmental taxing authorities. Our rate may be further impacted by the repatriation of foreign earnings
that are considered indefinitely reinvested to the extent the repatriation would result in additional taxes such as
withholding and income taxes. Indefinite reinvestment is determined by management’s judgment and intentions
concerning the future operations of the Company. In cases where repatriation would otherwise incur significant
withholding or income taxes, these foreign earnings have been indefinitely reinvested in active non-U.S. business
operations. Computation of the potential deferred tax liability associated with these undistributed earnings and any
other basis differences is not practicable.
Deferred income tax assets represent amounts available to reduce income taxes payable in future years. We
evaluate the recoverability of these future tax deductions and credits by assessing the adequacy of future taxable
income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and
available tax planning strategies. These sources of income rely heavily on estimates. We use our historical
experience and short and long range business forecasts to provide insight. We record a valuation allowance when
it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Our tax filings routinely are subject to audit by the tax authorities in the jurisdictions where we conduct business.
These audits may result in assessments of additional taxes that are resolved with the tax authorities or through the
courts. We have provided for the amounts we believe will ultimately result from these proceedings, but settlements
of issues raised in these audits may affect our tax rate. We have $496 million of gross unrecognized tax benefits,
excluding interest and penalties, at December 31, 2022. We are not able to reasonably estimate in which future
periods these amounts ultimately will be settled.
Allowance for Credit Losses
The estimation of anticipated credit losses that may be incurred as we work through the invoice collection
process with our customers requires us to make judgments and estimates regarding our customers' ability to pay
amounts due to us. We monitor our customers' payment history and current credit worthiness to determine that
collectability is reasonably assured. We also consider the overall business climate in which our customers operate.
For accounts receivable, a loss allowance matrix is utilized to measure lifetime expected credit losses. The matrix
contemplates historical credit losses by age of receivables, adjusted for any forward-looking information and
management expectations. At December 31, 2022 and 2021, the allowance for credit losses totaled $341 million
and $400 million of total gross accounts receivable, respectively. We believe that our allowance for credit losses is
adequate to cover the anticipated credit losses under current conditions; however, uncertainties regarding changes
in the financial condition of our customers, either adverse or positive, could impact the amount and timing of any
additional credit losses that may be required.
Inventory Reserves
Inventory is a significant component of current assets and is stated at the lower of cost or net realizable value.
This requires us to record provisions and maintain reserves for excess, slow moving, and obsolete inventory. To
determine these reserve amounts, we regularly review inventory quantities on hand and compare them to estimates
of future product demand, market conditions, production requirements, and technological developments. These
estimates and forecasts inherently include uncertainties and require us to make judgments regarding potential
future outcomes. At December 31, 2022 and 2021, inventory reserves totaled $396 million and $374 million of
gross inventory, respectively. We believe that our reserves are adequate to properly value potential excess, slow
moving, and obsolete inventory under current conditions. Significant or unanticipated changes to our estimates and
forecasts could impact the amount and timing of any additional provisions for excess, slow moving or obsolete
inventory that may be required.
NEW ACCOUNTING STANDARDS TO BE ADOPTED
See "Note 1. Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements in
Item 8 herein for further discussion of accounting standards to be adopted.
Baker Hughes Company 2022 Form 10-K | 45
RELATED PARTY TRANSACTIONS
See "Note 18. Related Party Transactions" of the Notes to Consolidated Financial Statements in Item 8 herein
for further discussion of related party transactions.
FORWARD-LOOKING STATEMENTS
This Form 10-K, including MD&A and certain statements in the Notes to Consolidated Financial Statements,
contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Exchange Act of 1934, as amended, (each a "forward-looking statement"). Forward-looking
statements concern future circumstances and results and other statements that are not historical facts and are
sometimes identified by the words "may," "will," "should," "potential," "intend," "expect," "endeavor," "seek,"
"anticipate," "estimate," "overestimate," "underestimate," "believe," "could," "project," "predict," "continue," "target" or
other similar words or expressions. Forward-looking statements are based upon current plans, estimates and
expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from
those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be
regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that
could cause actual results to differ materially from such plans, estimates or expectations include, among others, the
risk factors in the "Risk Factors" section of Part 1 of Item 1A of this Form 10-K and those set forth from time-to-time
in other filings by the Company with the SEC. These documents are available through our website or through the
SEC's Electronic Data Gathering and Analysis Retrieval ("EDGAR") system at http://www.sec.gov.
In light of such risks and uncertainties, we caution you not to place undue reliance on these forward-looking
statements. These forward-looking statements speak only as of the date of this annual report, or if earlier, as of the
date they were made. We do not intend to, and disclaim any obligation to, update or revise any forward-looking
statements unless required by securities law.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks that are inherent in our financial instruments and arise from changes in
interest rates and foreign currency exchange rates. We may enter into derivative financial instrument transactions
to manage or reduce market risk, but do not enter into derivative financial instrument transactions for speculative
purposes. A discussion of our primary market risk exposure in financial instruments is presented below.
INTEREST RATE RISK
All of our long-term debt is comprised of fixed rate instruments. We are subject to interest rate risk on our debt
and investment portfolio. As of December 31, 2022, we had interest rate swaps with a notional amount of $500
million that converted a portion of our $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes
due 2027 into a floating rate instrument with an interest rate based on a LIBOR index as a hedge of its exposure to
changes in fair value that are attributable to interest rate risk. The interest rate swaps are designated and each
qualify as a fair value hedging instrument. The interest rate swaps are considered to be effective at achieving
offsetting changes in the fair value of the hedged liability, and no ineffectiveness is recognized. The mark-to-market
of this fair value hedge was recorded as gain or loss in interest expense and was equally offset by the gain or loss
of the underlying debt instrument, which also was recorded in interest expense.
The following table sets forth our fixed rate long-term debt, excluding finance leases, and the related weighted
average interest rates by expected maturity dates.
(In millions)
As of December 31, 2022
Long-term debt (1)
2023
2024
2025
2026
2027
Thereafter
Total (2)
$ 650
$ 107
$ —
$ 600
$ 1,350
$ 3,756
$ 6,463
Weighted average interest rates
1.46%
4.07%
—%
2.36%
3.75%
4.06%
3.59%
(1) Fair market value of our fixed rate long-term debt, excluding finance leases, was $5.8 billion at December 31, 2022.
(2) Amounts represent the principal value of our long-term debt outstanding and related weighted average interest rates at
the end of the respective period.
Baker Hughes Company 2022 Form 10-K | 46
FOREIGN CURRENCY EXCHANGE RISK
We conduct our operations around the world in a number of different currencies, and we are exposed to market
risks resulting from fluctuations in foreign currency exchange rates. Many of our significant foreign subsidiaries
have designated the local currency as their functional currency. As such, future earnings are subject to change due
to fluctuations in foreign currency exchange rates when transactions are denominated in currencies other than our
functional currencies.
Additionally, we buy, manufacture and sell components and products across global markets. These activities
expose us to changes in foreign currency exchange rates, commodity prices and interest rates which can adversely
affect revenue earned and costs of our operating businesses. When the currency in which equipment is sold differs
from the primary currency of the legal entity and the exchange rate fluctuates, it will affect the revenue earned on
the sale. These sales and purchase transactions also create receivables and payables denominated in foreign
currencies and exposure to foreign currency gains and losses based on changes in exchange rates. Changes in
the price of raw materials used in manufacturing can affect the cost of manufacturing. We use derivatives to
mitigate or eliminate these exposures, where appropriate.
We use cash flow hedging primarily to reduce or eliminate the effects of foreign currency exchange rate
changes on purchase and sale contracts. Accordingly, most derivative activity in this category consists of currency
exchange contracts. We had outstanding foreign currency forward contracts with notional amounts aggregating $3
billion and $3.3 billion to hedge exposure to currency fluctuations in various foreign currencies at December 31,
2022 and 2021, respectively. The notional amount of these derivative instruments do not generally represent cash
amounts exchanged by us and the counterparties, but rather the nominal amount upon which changes in the value
of the derivatives are measured.
As of December 31, 2022, the Company estimates that a 1% appreciation or depreciation in the U.S. dollar
would result in an impact of less than $10 million to our pre-tax earnings, however, the Company is generally able to
mitigate its foreign exchange exposure, where there are liquid financial markets, through use of foreign currency
derivative transactions. Also, see "Note 15. Financial Instruments" of the Notes to Consolidated Financial
Statements in Item 8 herein, which has additional details on our strategy.
Baker Hughes Company 2022 Form 10-K | 47
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over our financial
reporting, as such term is defined in Exchange Act Rules 13a-15(f). Our internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted accounting principles.
Under the supervision and with the participation of our management, including our principal executive officer
and principal financial officer, we assessed the effectiveness of our internal control over financial reporting based on
the 2013 framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our assessment, our principal executive officer and principal
financial officer concluded that our internal control over financial reporting was effective as of December 31, 2022.
This conclusion is based on the recognition that there are inherent limitations in all systems of internal control.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
KPMG LLP, the Company's independent registered public accounting firm, has issued an attestation report on
the effectiveness of the Company's internal control over financial reporting.
/s/ LORENZO SIMONELLI
Lorenzo Simonelli
Chairman, President and
Chief Executive Officer
/s/ NANCY BUESE
Nancy Buese
Chief Financial Officer
/s/ KURT CAMILLERI
Kurt Camilleri
Senior Vice President, Controller
and Chief Accounting Officer
Houston, Texas
February 14, 2023
Baker Hughes Company 2022 Form 10-K | 48
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Baker Hughes Company:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Baker Hughes Company and
subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income (loss),
comprehensive income (loss), changes in equity, and cash flows for each of the years in the three-year period ended
December 31, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission, and our report dated February 14, 2023 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating
the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Revenue recognition on certain agreements for sales of equipment manufactured to unique customer
specifications
As discussed in Note 1 to the consolidated financial statements, the Company enters into agreements for
sales of equipment manufactured to unique customer specifications on an over time basis. Revenue from
these types of contracts is recognized to the extent of progress towards completion measured by actual costs
incurred relative to total expected costs. The Company provides for potential losses on these types of
contracts when it is probable that a loss will be incurred.
We identified revenue recognition for certain contracts from the sales of equipment manufactured to unique
customer specifications as a critical audit matter. Complex auditor judgment was required in evaluating the
Company's long-term estimates of the expected costs to be incurred in order to complete these contracts.
Baker Hughes Company 2022 Form 10-K | 49
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls related to the Company’s revenue
recognition process for sales of equipment manufactured to unique customer specifications. This included
controls pertaining to the Company's estimation of costs expected to be incurred to complete contracts for
sales of equipment manufactured to unique customer specifications. We evaluated the Company's ability to
accurately estimate costs expected to be incurred to complete the contracts for sales of equipment
manufactured to unique customer specifications. We evaluated the estimated costs expected to be incurred to
complete the equipment manufactured to unique customer specifications for the contracts by:
– questioning the Company's finance and project managers regarding progress to date based on the
latest project reports and the costs expected to still be incurred until completion;
– observing project review meetings performed by the Company or inspecting relevant minutes of those
meetings to identify changes in the estimated costs expected to be incurred to complete the contract
and related contract margins;
– assessing the remaining estimated costs expected to be incurred by expenditure category by
comparing to the actual costs incurred during the current year for the selected project; and
– investigating changes to the contract margin when compared to the prior year's estimated contract
margin.
We have served as the Company’s auditor since 2017.
/s/ KPMG LLP
Houston, Texas
February 14, 2023
Baker Hughes Company 2022 Form 10-K | 50
REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors
Baker Hughes Company:
Opinion on Internal Control Over Financial Reporting
We have audited Baker Hughes Company and subsidiaries' (the Company) internal control over financial reporting as
of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2022 and
2021, the related consolidated statements of income (loss), comprehensive income (loss), changes in equity, and
cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes
(collectively, the consolidated financial statements), and our report dated February 14, 2023 expressed an unqualified
opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit
also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ KPMG LLP
Houston, Texas
February 14, 2023
Baker Hughes Company 2022 Form 10-K | 51
BAKER HUGHES COMPANY
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In millions, except per share amounts)
Revenue:
Sales of goods
Sales of services
Total revenue
Costs and expenses:
Cost of goods sold
Cost of services sold
Selling, general and administrative
Goodwill impairment
Restructuring, impairment and other
Separation related
Total costs and expenses
Operating income (loss)
Other non-operating income (loss), net
Interest expense, net
Income (loss) before income taxes
Provision for income taxes
Net loss
Less: Net income (loss) attributable to noncontrolling interests
Year Ended December 31,
2022
2021
2020
$ 12,236 $ 12,248 $ 12,846
8,920
8,254
7,859
21,156
20,502
20,705
10,445
10,458
11,383
6,311
2,510
—
682
23
5,995
2,470
—
209
60
6,123
2,404
14,773
1,866
134
19,971
19,192
36,683
1,185
1,310
(15,978)
(911)
(252)
22
(600)
(578)
23
(583)
(299)
428
(758)
1,040
(264)
(15,202)
(559)
(330)
(15,761)
(111)
(5,821)
Net loss attributable to Baker Hughes Company
$
(601) $
(219) $
(9,940)
Per share amounts:
Basic & diluted income (loss) per Class A common share
Cash dividend per Class A common share
$
$
(0.61) $
(0.27) $
(14.73)
0.73 $
0.72 $
0.72
See accompanying Notes to Consolidated Financial Statements
Baker Hughes Company 2022 Form 10-K | 52
BAKER HUGHES COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
Net loss
Less: Net income (loss) attributable to noncontrolling interests
Net loss attributable to Baker Hughes Company
Other comprehensive income (loss):
Investment securities
Foreign currency translation adjustments
Cash flow hedges
Benefit plans
Other comprehensive income (loss)
Less: Other comprehensive loss attributable to noncontrolling interests
Other comprehensive income (loss) attributable to Baker Hughes Company
Comprehensive loss
Less: Comprehensive income (loss) attributable to noncontrolling interests
Year Ended December 31,
2022
2021
2020
$
(578) $
(330) $ (15,761)
23
(601)
—
(269)
2
(14)
(281)
(3)
(278)
(859)
20
(111)
(219)
(5,821)
(9,940)
—
(305)
(16)
170
(151)
(16)
(135)
(2)
175
(5)
(125)
43
—
43
(481)
(15,718)
(127)
(5,821)
Comprehensive loss attributable to Baker Hughes Company
$
(879) $
(354) $
(9,897)
See accompanying Notes to Consolidated Financial Statements
Baker Hughes Company 2022 Form 10-K | 53
BAKER HUGHES COMPANY
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In millions, except par value)
ASSETS
Current Assets:
Cash and cash equivalents
Current receivables, net
Inventories, net
All other current assets
Total current assets
Property, plant and equipment, less accumulated depreciation
Goodwill
Other intangible assets, net
Contract and other deferred assets
All other assets
Deferred income taxes
Total assets
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable
Short-term debt and current portion of long-term debt
Progress collections and deferred income
All other current liabilities
Total current liabilities
Long-term debt
Deferred income taxes
Liabilities for pensions and other postretirement benefits
All other liabilities
Equity:
Class A common stock, $0.0001 par value - 2,000 authorized, 1,006 and 909
issued and outstanding as of December 31, 2022 and 2021, respectively
Class B common stock, $0.0001 par value - 1,250 authorized, nil and 117
issued and outstanding as of December 31, 2022 and 2021, respectively
Capital in excess of par value
Retained loss
Accumulated other comprehensive loss
Baker Hughes Company equity
Noncontrolling interests
Total equity
Total liabilities and equity
December 31,
2022
2021
2,488 $
5,958
4,587
1,559
14,592
4,538
5,930
4,180
1,503
2,781
657
34,181 $
4,298 $
677
3,822
2,278
11,075
5,980
229
960
1,412
3,853
5,651
3,979
1,582
15,065
4,877
5,959
4,131
1,598
2,943
735
35,308
3,745
40
3,232
2,111
9,128
6,687
127
1,110
1,510
—
—
—
28,126
(10,761)
(2,971)
14,394
131
14,525
34,181 $
—
27,375
(10,160)
(2,385)
14,830
1,916
16,746
35,308
$
$
$
$
See accompanying Notes to Consolidated Financial Statements
Baker Hughes Company 2022 Form 10-K | 54
BAKER HUGHES COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In millions, except per share amounts)
Balance at December 31, 2019
Comprehensive income (loss):
Net loss
Other comprehensive income
Dividends on Class A Common Stock ($0.72 per share)
Distributions to GE
Effect of exchange of Class B common stock and associated
BHH LLC Units for Class A common stock
Stock-based compensation cost
Other
Balance at December 31, 2020
Comprehensive loss:
Net loss
Other comprehensive loss
Dividends on Class A Common Stock ($0.72 per share)
Distributions to GE
Effect of exchange of Class B common stock and associated
BHH LLC Units for Class A common stock
Repurchase and cancellation of Class A common stock
Stock-based compensation cost
Other
Balance at December 31, 2021
Comprehensive income (loss):
Net income (loss)
Other comprehensive loss
Dividends on Class A Common Stock ($0.73 per share)
Distributions to GE
Effect of exchange of Class B common stock and associated
BHH LLC Units for Class A common stock
Repurchase and cancellation of Class A common stock
Stock-based compensation cost
Other
Balance at December 31, 2022
Class A and
Class B
Common
Stock
Capital in
Excess of
Par Value
— $ 23,565 $
Retained
Earnings
(Loss)
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interests
(1,636) $ 12,570 $ 34,499
Total
— $
(9,940)
43
(5,821) (15,761)
43
(488)
(256)
(256)
(185)
(488)
1,317
210
9
— 24,613
(2)
(9,942)
(1,778)
(219)
(592)
3,584
(418)
205
(17)
— 27,375 (10,160)
1
(601)
(726)
2,060
(823)
207
33
— $ 28,126 $ (10,761) $
(135)
(477)
5
(2,385)
(278)
(309)
1
(2,971) $
(1,132)
—
210
(5)
5,349 18,242
(12)
(111)
(16)
(157)
(330)
(151)
(592)
(157)
(3,107)
(21)
—
(434)
205
(37)
1,916 16,746
(21)
23
(3)
(17)
(578)
(281)
(726)
(17)
(1,751)
(6)
—
(828)
207
(31)
2
131 $ 14,525
See accompanying Notes to Consolidated Financial Statements
Baker Hughes Company 2022 Form 10-K | 55
BAKER HUGHES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization
Loss on business dispositions
Loss (gain) on equity securities
Stock-based compensation cost
Property, plant and equipment impairment
Inventory impairment
Goodwill impairment
Intangible assets impairment
Changes in operating assets and liabilities:
Current receivables
Inventories
Accounts payable
Progress collections and deferred income
Contract and other deferred assets
Other operating items, net
Net cash flows from operating activities
Cash flows from investing activities:
Expenditures for capital assets
Proceeds from disposal of assets
Proceeds from business dispositions
Net cash paid for acquisitions and business interests
Other investing items, net
Net cash flows used in investing activities
Cash flows from financing activities:
Net repayments of short-term debt
Proceeds from the issuance of long-term debt
Proceeds from (repayment of) commercial paper
Repayments of long-term debt
Dividends paid
Distributions to GE
Repurchase of Class A common stock
Other financing items, net
Net cash flows from (used in) financing activities
Effect of currency exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Year Ended December 31,
2022
2021
2020
$
(578) $
(330) $
(15,761)
1,061
1,105
1,317
451
265
207
166
31
—
18
(625)
(885)
605
1,103
(76)
145
—
845
205
7
—
—
—
(126)
170
246
(72)
262
62
353
(1,417)
210
461
246
14,773
729
680
(80)
(711)
396
(69)
177
1,888
2,374
1,304
(989)
217
—
(845)
53
(1,564)
(28)
—
—
—
(726)
(17)
(828)
7
(856)
315
70
(266)
274
(463)
(974)
187
187
(57)
39
(618)
(41)
(204)
1,250
(832)
(1,313)
(592)
(157)
(434)
(24)
500
737
(42)
(488)
(256)
—
(22)
225
(28)
883
3,249
4,132
(1,592)
(2,143)
(97)
(1,365)
(47)
(279)
3,853
4,132
$
2,488 $
3,853 $
See "Note 23. Supplementary Information" for additional cash flow disclosures
See accompanying Notes to Consolidated Financial Statements
Baker Hughes Company 2022 Form 10-K | 56
Baker Hughes Company
Notes to Consolidated Financial Statements
NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF THE BUSINESS
Baker Hughes Company ("Baker Hughes", "the Company", "we", "us", or "our") is an energy technology
company with a diversified portfolio of technologies and services that span the energy and industrial value chain.
We are a holding company and have no material assets other than our wholly owned operating company, Baker
Hughes Holdings LLC ("BHH LLC"). As of December 31, 2022, General Electric Company ("GE") no longer had an
economic interest in BHH LLC. As of December 31, 2021, GE's economic interest in BHH LLC was 11.4%. See
"Note 13. Equity" for further information. BHH LLC is a Securities and Exchange Commission ("SEC") registrant
with separate filing requirements with the SEC and its separate financial information can be obtained from
www.sec.gov.
BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S." and such principles, "U.S. GAAP")
and pursuant to the rules and regulations of the SEC for annual financial information. The consolidated financial
statements include the accounts of Baker Hughes and all of its subsidiaries and affiliates which it controls or
variable interest entities for which we have determined that we are the primary beneficiary. All intercompany
accounts and transactions have been eliminated.
In the Company's consolidated financial statements and notes, certain amounts have been reclassified to
conform with the current year presentation. In the notes to the consolidated financial statements, all dollar and
share amounts in tabulations are in millions of dollars and shares, respectively, unless otherwise indicated. Certain
columns and rows in our financial statements and notes thereto may not add due to the use of rounded numbers.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates
and judgments that affect the reported amounts of assets and liabilities, disclosure of any contingent assets or
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. We base our estimates and judgments on historical experience and on various other assumptions
and information that we believe to be reasonable under the circumstances. Estimates and assumptions about
future events and their effects cannot be perceived with certainty, and accordingly, these estimates may change as
new events occur, as more experience is acquired, as additional information is obtained and as our operating
environment changes. While we believe that the estimates and assumptions used in the preparation of the
consolidated financial statements are appropriate, actual results could differ from those estimates. Estimates are
used for, but are not limited to, determining the following: allowance for credit losses and inventory valuation
reserves; recoverability of long-lived assets; revenue recognition on long-term contracts; valuation of goodwill;
useful lives used in depreciation and amortization; income taxes and related valuation allowances; accruals for
contingencies; actuarial assumptions to determine costs and liabilities related to employee benefit plans; stock-
based compensation expense; valuation of derivatives; and the fair value of assets acquired and liabilities assumed
in acquisitions.
Foreign Currency
Assets and liabilities of non-U.S. operations with a functional currency other than the U.S. dollar have been
translated into U.S. dollars using our period end exchange rates, and revenue, expenses, and cash flows have been
translated at average rates for the respective periods. Any resulting translation gains and losses are included in
other comprehensive income (loss).
Baker Hughes Company 2022 Form 10-K | 57
Baker Hughes Company
Notes to Consolidated Financial Statements
Gains and losses from foreign currency transactions, such as those resulting from the settlement of receivables
or payables in the non-functional currency and those resulting from remeasurements of monetary items of non-U.S.
operations where the functional currency is the U.S. dollar, are included in the consolidated statements of income
(loss).
Revenue from Sale of Equipment
Performance Obligations Satisfied Over Time
We recognize revenue on agreements for sales of equipment manufactured to unique customer specifications
including long-term construction projects, on an over time basis, utilizing cost inputs as the measurement criteria in
assessing the progress toward completion. Our estimate of costs to be incurred to fulfill our promise to a customer
is based on our history of manufacturing similar assets for customers and is updated routinely to reflect changes in
quantity or pricing of the inputs. We begin to recognize revenue on these contracts when the contract specific
inventory becomes customized for a customer, which is reflective of our initial transfer of control of the incurred
costs. We provide for potential losses on any of these agreements when it is probable that we will incur the loss.
Our billing terms for these over time contracts vary, but are generally based on achieving specified milestones.
The differences between the timing of our revenue recognized (based on costs incurred) and customer billings
(based on contractual terms) results in changes to our contract asset or contract liability positions.
Performance Obligations Satisfied at a Point In Time
We recognize revenue for non-customized equipment at the point in time that the customer obtains control of
the good. Equipment for which we recognize revenue at a point in time includes equipment we manufacture on a
standardized basis for sale to the market. We use proof of delivery for certain large equipment with more complex
logistics associated with the shipment, whereas the delivery of other equipment is generally determined based on
historical data of transit times between regions.
On occasion we sell equipment with a right of return. We use our accumulated experience to estimate and
provide for such returns when we record the sale. In situations where arrangements include customer acceptance
provisions based on seller or customer-specified objective criteria, we recognize revenue when we have concluded
that the customer has control of the equipment and that acceptance has or is likely to occur.
Our billing terms for these point in time equipment contracts vary, but are generally based on shipment of the
equipment to the customer.
Revenue from Sale of Services
Performance Obligations Satisfied Over Time
We sell product services under long-term product maintenance or extended warranty agreements in our
Industrial & Energy Technology segment. These agreements require us to maintain the customers' assets over the
service agreement contract terms, which generally range from 10 to 20 years. In general, these are contractual
arrangements to provide services, repairs, and maintenance of a covered unit (gas turbines for mechanical drive or
power generation, primarily on LNG applications). These services are performed at various times during the life of
the contract, thus the costs of performing services are incurred on an other than straight-line basis. We recognize
related sales based on the extent of our progress toward completion measured by actual costs incurred in relation
to total expected costs. We provide for any loss that we expect to incur on any of these agreements when that loss
becomes probable. The Company utilizes historical customer data, prior product performance data, statistical
analysis, third-party data, and internal management estimates to calculate contract-specific margins. In certain
contracts, the total transaction price is variable based on customer utilization, which is excluded from the contract
margin until the period that the customer has utilized to appropriately reflect the revenue activity in the period
earned. In addition, revenue for certain oilfield services is recognized on an over time basis as performed.
Baker Hughes Company 2022 Form 10-K | 58
Baker Hughes Company
Notes to Consolidated Financial Statements
Our billing terms for these contracts are generally based on asset utilization (i.e. usage per hour) or the
occurrence of a major maintenance event within the contract. The differences between the timing of our revenue
recognized (based on costs incurred) and customer billings (based on contractual terms) results in changes to our
contract asset or contract liability positions.
Performance Obligations Satisfied at a Point In Time
We sell certain tangible products, largely spare equipment, through our services business. We recognize
revenue for this equipment at the point in time that the customer obtains control of the good, which is at the point in
time we deliver the spare part to the customer. Our billing terms for these point in time service contracts vary, but
are generally based on shipment of the equipment to the customer.
Research and Development
Research and development costs are expensed as incurred and relate to the research and development of new
products and services. These costs amounted to $556 million, $492 million and $595 million for the years ended
December 31, 2022, 2021 and 2020, respectively. Research and development expenses were reported in cost of
goods sold and cost of services sold.
Separation Related
Separation related costs relate to activities performed to facilitate the separation from GE including costs for the
build-out of certain information technology infrastructures as a result of the separation. Separation activities were
substantially completed by the end of 2022.
Cash and Cash Equivalents
Short-term investments with original maturities of three months or less are included in cash equivalents unless
designated as available-for-sale and classified as investment securities.
As of December 31, 2022 and 2021, we had $605 million and $601 million, respectively, of cash held in bank
accounts that cannot be readily released, transferred or otherwise converted into a currency that is regularly
transacted internationally, due to lack of market liquidity, capital controls or similar monetary or exchange limitations
limiting the flow of capital out of the jurisdiction. These funds are available to fund operations and growth in these
jurisdictions and we do not currently anticipate a need to transfer these funds to the U.S.
Allowance for Credit Losses
We monitor our customers' payment history and current credit worthiness to determine that collectability of the
related financial assets are reasonably assured. We also consider the overall business climate in which our
customers operate. For accounts receivable, a loss allowance matrix is utilized to measure lifetime expected credit
losses. The matrix contemplates historical credit losses by age of receivables, adjusted for any forward-looking
information and management expectations.
Concentration of Credit Risk
Our current receivables are spread over a broad and diverse group of customers across many countries. We
grant credit to our customers and perform periodic credit evaluations of our customers' financial conditions,
including monitoring our customers' payment history and current credit worthiness to manage this risk. We do not
generally require collateral in support of our current receivables, but we may require payment in advance or security
in the form of a letter of credit or a bank guarantee.
Inventories
All inventories are stated at the lower of cost or net realizable values and they are measured on a first-in, first-
out ("FIFO") basis or average cost basis. As necessary, we record provisions and maintain reserves for excess,
Baker Hughes Company 2022 Form 10-K | 59
Baker Hughes Company
Notes to Consolidated Financial Statements
slow moving and obsolete inventory. To determine these reserve amounts, we regularly review inventory quantities
on hand and compare them to estimates of future product demand, market conditions, production requirements and
technological developments.
Property, Plant and Equipment ("PP&E")
Property, plant and equipment is initially stated at cost and is depreciated over its estimated economic life.
Subsequently, property, plant and equipment is measured at cost less accumulated depreciation, which is generally
provided by using the straight-line method over the estimated economic lives of the individual assets, and
impairment losses. We manufacture a substantial portion of our tools and equipment in our OFSE segment and the
cost of these items, which includes direct and indirect manufacturing costs, is capitalized in inventory and
subsequently moved to PP&E.
Other Intangible Assets
We amortize the cost of other intangible assets over their estimated useful lives unless such lives are deemed
indefinite. The cost of intangible assets is generally amortized on a straight-line basis over the asset's estimated
economic life. Amortizable intangible assets are reviewed for impairment whenever events or changes in
circumstances indicate that the related carrying amounts may not be recoverable. In these circumstances, they are
tested for impairment based on undiscounted cash flows and, if impaired, written down to fair value based on either
discounted cash flows or appraised values. Intangible assets with indefinite lives are tested annually for impairment
and written down to fair value as required. Refer to the Impairment of Goodwill and Other Long-Lived Assets
accounting policy.
Impairment of Goodwill and Other Long-lived Assets
We perform an annual impairment test of goodwill on a qualitative or quantitative basis for each of our reporting
units as of July 1, or more frequently when circumstances indicate an impairment may exist at the reporting unit
level. When performing the annual impairment test we have the option of first performing a qualitative assessment
to determine the existence of events and circumstances that would lead to a determination that it is more likely than
not that the fair value of a reporting unit is less than its carrying amount. If such a conclusion is reached, we would
then be required to perform a quantitative impairment assessment of goodwill. However, if the assessment leads to
a determination that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount,
then no further assessments are required. A quantitative assessment for the determination of impairment is made
by comparing the carrying amount of each reporting unit with its fair value, which is generally calculated using a
combination of market, comparable transaction and discounted cash flow approaches. See "Note 5. Goodwill and
Other Intangible Assets" for further information on valuation methodology and impairment of goodwill.
We review PP&E, intangible assets and certain other long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable and at least annually for
indefinite-lived intangible assets. When testing for impairment, we group our long-lived assets with other assets and
liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other
assets and liabilities (or asset group). The determination of recoverability is made based upon the estimated
undiscounted future net cash flows. The amount of impairment loss, if any, is determined by comparing the fair
value, as determined by a discounted cash flow analysis, with the carrying value of the related assets.
Financial Instruments
Our financial instruments include cash and equivalents, current receivables, investments, accounts payables,
short and long-term debt, and derivative financial instruments.
We monitor our exposure to various business risks including commodity prices and foreign currency exchange
rates and we regularly use derivative financial instruments to manage these risks. At the inception of a new
derivative, we designate the derivative as a hedge or we determine the derivative to be undesignated as a hedging
instrument. We document the relationships between the hedging instruments and the hedged items, as well as our
risk management objectives and strategy for undertaking various hedge transactions. We assess whether the
Baker Hughes Company 2022 Form 10-K | 60
Baker Hughes Company
Notes to Consolidated Financial Statements
derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the
hedged item at both the inception of the hedge and on an ongoing basis.
We have a program that utilizes foreign currency forward contracts to reduce the risks associated with the
effects of certain foreign currency exposures. Under this program, our strategy is to have gains or losses on the
foreign currency forward contracts mitigate the foreign currency transaction and translation gains or losses to the
extent practical. These foreign currency exposures typically arise from changes in the value of assets (for example,
current receivables) and liabilities (for example, current payables) which are denominated in currencies other than
the functional currency of the respective entity. We record all derivatives as of the end of our reporting period in our
consolidated statements of financial position at fair value. For the forward contracts held as undesignated hedging
instruments, we record the changes in fair value of the forward contracts in our consolidated statements of income
(loss) along with the change in the fair value, related to foreign exchange movements, of the hedged item. Changes
in the fair value of forward contracts designated as cash flow hedging instruments are recognized in other
comprehensive income until the hedged item is recognized in earnings.
Fair Value Measurements
For financial assets and liabilities measured at fair value on a recurring basis, fair value is the price we would
receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the
measurement date. In the absence of active markets for the identical assets or liabilities, such measurements
involve developing assumptions based on market observable data and, in the absence of such data, internal
information that is consistent with what market participants would use in a hypothetical transaction that occurs at the
measurement date.
Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our
market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair
value hierarchy:
•
•
•
Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar
instruments in markets that are not active; and model-derived valuations whose inputs are observable or
whose significant value drivers are observable.
Level 3 - Significant inputs to the valuation model are unobservable.
We maintain policies and procedures to value instruments using the best and most relevant data available. In
addition, we perform reviews to assess the reasonableness of the valuations. With regard to Level 3 valuations
(including instruments valued by third parties), we perform a variety of procedures to assess the reasonableness of
the valuations. Such reviews include an evaluation of instruments whose fair value change exceeds predefined
thresholds (and/or does not change) and consider the current interest rate, currency and credit environment, as well
as other published data, such as rating agency market reports and current appraisals.
Recurring Fair Value Measurements
Derivatives
When we have Level 1 derivatives, which are traded either on exchanges or liquid over-the-counter markets, we
use closing prices for valuation. The majority of our derivatives are valued using internal models and are included in
Level 2. These internal models maximize the use of market observable inputs including interest rate curves and
both forward and spot prices for currencies and commodities. Derivative assets and liabilities included in Level 2
primarily represent foreign currency and commodity forward contracts for the Company.
Investments in Debt and Equity Securities
When available, we use quoted market prices to determine the fair value of investment securities, and they are
included in Level 1. Level 1 securities primarily include publicly traded equity securities.
Baker Hughes Company 2022 Form 10-K | 61
Baker Hughes Company
Notes to Consolidated Financial Statements
For investment securities for which market prices are observable for identical or similar investment securities
but not readily accessible for each of those investments individually (that is, it is difficult to obtain pricing information
for each individual investment security at the measurement date), we use pricing models that are consistent with
what other market participants would use. The inputs and assumptions to the models are derived from market
observable sources including: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark
securities, bids, offers, and other market-related data. Thus, certain securities may not be priced using quoted
prices, but rather determined from market observable information. These investments are included in Level 2.
When we use valuations that are based on significant unobservable inputs we classify the investment securities in
Level 3.
Non-Recurring Fair Value Measurements
Certain assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments
only in certain circumstances. These assets can include long-lived assets that have been reduced to fair value
when they are held for sale, equity securities without readily determinable fair value, equity method investments and
long-lived assets that are written down to fair value when they are impaired, and the remeasurement of retained
investments in formerly consolidated subsidiaries upon a change in control that results in a deconsolidation of a
subsidiary, if we sell a controlling interest and retain a noncontrolling stake in the entity.
Investments in Equity Securities
Investments in equity securities (of entities in which we do not have either a controlling financial interest or
significant influence, most often because we hold a voting interest of 0% to 20%) with readily determinable fair
values are measured at fair value with changes in fair value recognized in earnings and reported in "other non-
operating income (loss), net" in the consolidated statements of income (loss). Equity securities that do not have
readily determinable fair values are recorded at cost minus impairment, if any, plus or minus changes resulting from
observable price changes in orderly transactions for identical or similar equity securities of the same issuer. These
changes are recorded in "other non-operating income (loss), net" in the consolidated statements of income (loss).
Equity method investments are equity holdings in entities in which we do not have a controlling financial
interest, but over which we have significant influence, most often because we hold a voting interest of 20% to 50%.
The results of our equity method investments are presented in the consolidated statements of income (loss) as
follows: (i) if the investment is integral to our operations, their results are included in "Selling, general and
administrative," and (ii) if the investment is not integral to our operations, their results are included in "Other non-
operating income (loss), net." Investments in, and advances to, equity method investments are presented on a one-
line basis in the caption "All other assets" in our consolidated statements of financial position.
Income Taxes
We file U.S. federal and state income tax returns which primarily includes our distributive share of items of
income, gain, loss and deduction of BHH LLC, which is treated as a partnership for U.S. tax purposes. As such,
BHH LLC will not itself be subject to U.S. federal income tax under current U.S. tax laws. Non-U.S. current and
deferred income taxes owed by the subsidiaries of BHH LLC are reflected in the financial statements.
We account for taxes under the asset and liability method. Under this method, deferred income taxes are
recognized for temporary differences between the financial statement and the tax base of assets and liabilities
based on enacted tax rates expected to be in effect when taxes are actually paid or recovered, as well as for net
operating losses and tax credit carryforwards. The effect of a change in tax laws or rates on deferred tax assets
and liabilities is recognized in income in the period in which such change is enacted. Future tax benefits are
recognized to the extent that realization of such benefits is more likely than not, and a valuation allowance is
established for any portion of a deferred tax asset that management believes is not more likely than not to be
realized.
We provide U.S. deferred taxes on our outside basis difference in our investment in BHH LLC. In determining
this outside basis difference, we exclude non-deductible goodwill and the basis difference related to certain foreign
Baker Hughes Company 2022 Form 10-K | 62
Baker Hughes Company
Notes to Consolidated Financial Statements
corporations owned by BHH LLC where the undistributed earnings of the foreign corporation have been, or will be,
reinvested indefinitely.
Indefinite reinvestment is determined by management’s judgment and intentions concerning the future
operations of the Company. In cases where repatriation would incur significant withholding or income taxes, these
foreign earnings have been indefinitely reinvested in the Company’s active non-U.S. business operations.
Computation of the potential deferred tax liability associated with these undistributed earnings and any other basis
difference is not practicable.
Significant judgment is required in determining our tax expense and in evaluating our tax positions, including
evaluating uncertainties. Our tax filings are subject to audit by the tax authorities in the jurisdictions where we
conduct business. These audits may result in assessments of additional taxes that are resolved with the tax
authorities or through the courts. We have provided for the amounts that we believe will ultimately result from these
proceedings. We recognize uncertain tax positions that are “more likely than not” to be sustained if the relevant tax
authority were to audit the position with full knowledge of all the relevant facts and other information. For those tax
positions that meet this threshold, we measure the amount of tax benefit based on the largest amount of tax benefit
that has a greater than 50% chance of being realized in a final settlement with the relevant authority. We classify
interest and penalties associated with uncertain tax positions as income tax expense. The effects of tax
adjustments and settlements from taxing authorities are presented in financial statements in the period they are
finalized.
Environmental Liabilities
We are involved in numerous remediation actions to clean up hazardous waste as required by federal and state
laws. Liabilities for remediation costs exclude possible insurance recoveries and, when dates and amounts of such
costs are not known, are not discounted. When there appears to be a range of possible costs with equal likelihood,
liabilities are based on the low end of such range. It is reasonably possible that our environmental remediation
exposure will exceed amounts accrued. However, due to uncertainties about the status of laws, regulations,
technology and information related to individual sites, such amounts are not reasonably estimable. The
determination of the required accruals for remediation costs is subject to uncertainty, including the evolving nature
of environmental regulations and the difficulty in estimating the extent and type of remediation activity that is
necessary.
NEW ACCOUNTING STANDARDS TO BE ADOPTED
New accounting pronouncements that have been issued, but not yet effective are currently being evaluated and
at this time are not expected to have a material impact on our financial position or results of operations.
NOTE 2. CURRENT RECEIVABLES
Current receivables are comprised of the following at December 31:
Customer receivables
Related parties
Other
Total current receivables
Less: Allowance for credit losses
Total current receivables, net
2022
2021
$
5,083 $
—
1,216
6,299
(341)
$
5,958 $
4,724
481
846
6,051
(400)
5,651
Customer receivables are recorded at the invoiced amount. Related parties as of December 31, 2021 consists
of amounts owed to us primarily by GE. As of June 30, 2022, GE is no longer considered a related party. See
"Note 18. Related Party Transactions" for further information. The "Other" category consists primarily of advance
payments to suppliers, indirect taxes, and customer retentions.
Baker Hughes Company 2022 Form 10-K | 63
Baker Hughes Company
Notes to Consolidated Financial Statements
NOTE 3. INVENTORIES
Inventories, net of reserves of $396 million and $374 million in 2022 and 2021, respectively, are comprised of
the following at December 31:
Finished goods
Work in process and raw materials
Total inventories, net
2022
2021
$
$
2,419 $
2,168
4,587 $
2,228
1,751
3,979
For the year ended December 31, 2022, we recorded inventory impairments of $31 million. Inventory
impairments in 2022 were primarily in our Industrial & Energy Technology segment as part of suspending our
Russia operations. Inventory impairments are reported in the "Cost of goods sold" caption of the consolidated
statements of income (loss). There were no inventory impairments during 2021.
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following at December 31:
Useful Life
2022
2021
Land and improvements (1)
Buildings, structures and related equipment
Machinery, equipment and other
Total cost
Less: Accumulated depreciation
8 - 20 years (1) $
5 - 40 years
2 - 20 years
Property, plant and equipment, less accumulated depreciation
$
(1) Useful life excludes land.
347 $
2,120
7,192
9,659
(5,121)
4,538 $
350
2,271
7,259
9,880
(5,003)
4,877
Depreciation expense relating to property, plant and equipment was $839 million, $852 million and $1,009
million for the years ended December 31, 2022, 2021 and 2020, respectively. See "Note 20. Restructuring,
Impairment and Other" for additional information on property, plant and equipment impairments.
Baker Hughes Company 2022 Form 10-K | 64
Baker Hughes Company
Notes to Consolidated Financial Statements
NOTE 5. GOODWILL AND INTANGIBLE ASSETS
GOODWILL
The changes in the carrying value of goodwill are detailed below by segment:
Oilfield Services
& Equipment
Industrial & Energy
Technology
Total
Balance at December 31, 2020, gross
$
Accumulated impairment at December 31, 2020
Balance at December 31, 2020
Currency exchange and others
Balance at December 31, 2021
Disposition (1)
Acquisitions (2)
Currency exchange, impairment and other
Total
Classified as held for sale (3)
Balance at December 31, 2022
19,818 $
(18,273)
1,545
7
1,552
(161)
41
—
1,432
—
4,686 $
24,504
(254)
4,432
(25)
4,407
—
417
(96)
4,728
(230)
(18,527)
5,977
(18)
5,959
(161)
458
(96)
6,160
(230)
5,930
$
1,432 $
4,498 $
(1) The reduction in Oilfield Services & Equipment ("OFSE") goodwill relates to the sale of part of our OFSE Russia
business. See "Note 21. Business Dispositions and Acquisitions" for further information.
(2) See "Note 21. Business Dispositions and Acquisitions" for further information related to acquisitions occurring during
2022.
(3) The reduction in Industrial & Energy Technology ("IET") goodwill relates to transferring our IET Nexus Controls business
to held for sale. See "Note 22. Business Held for Sale" for further information.
We perform our annual goodwill impairment test for each of our reporting units as of July 1 of each fiscal year, in
conjunction with our annual strategic planning process. We also test goodwill for impairment whenever events or
circumstances occur which, in our judgment, could more likely than not reduce the fair value of one or more
reporting units below its carrying value. Potential impairment indicators include, but are not limited to, (i) the results
of our most recent annual or interim impairment testing, in particular the magnitude of the excess of fair value over
carrying value observed, (ii) downward revisions to internal forecasts, and the magnitude thereof, if any, and (iii)
declines in our market capitalization below our book value, and the magnitude and duration of those declines, if any.
During the third quarter of 2022, we completed our annual impairment test for each of our reporting units and
determined that the fair value was substantially in excess of the carrying value for each reporting unit except for
Subsea & Surface Pressure Systems (formerly Oilfield Equipment) resulting in an immaterial impairment of the
residual amount of goodwill for this reporting unit. As previously disclosed, effective October 1, 2022, the Company
reorganized to create two operating segments. In conjunction with the change in segments, the Company
reevaluated its reporting units and concluded there was an immaterial change to the composition of its reporting
units resulting in an immaterial goodwill allocation. In addition, we assessed our goodwill for recoverability following
the reorganization, and concluded there was no impairment, which was consistent with our annual goodwill
impairment test completed immediately prior to the reorganization. See "Note 17. Segment Information" for further
details on the change in operating segments. Between our annual test and December 31, 2022, we did not identify
any indicators that would lead to a determination that it is more likely than not the fair value of any reporting unit is
less than its carrying value. There can be no assurances that future sustained declines in macroeconomic or
business conditions affecting our industry will not occur, which could result in goodwill impairment charges in future
periods.
Baker Hughes Company 2022 Form 10-K | 65
Baker Hughes Company
Notes to Consolidated Financial Statements
OTHER INTANGIBLE ASSETS
Intangible assets are comprised of the following at December 31:
2022
2021
Gross
Carrying
Amount
Accumulated
Amortization
Net
Gross
Carrying
Amount
Accumulated
Amortization
Net
Customer relationships
$
1,917 $
(729) $ 1,189 $
1,922 $
(752) $ 1,170
Technology
Trade names and trademarks
Capitalized software
Finite-lived intangible assets
Indefinite-lived intangible assets
1,212
287
1,308
4,725
2,202
(803)
(175)
(1,040)
409
112
268
(2,747)
1,978
—
2,202
1,090
292
1,311
4,615
2,241
(747) $
(169)
(1,057)
343
123
254
(2,725)
1,890
—
2,241
Total intangible assets
$
6,927 $
(2,747) $ 4,180 $
6,856 $
(2,725) $ 4,131
Intangible assets are generally amortized on a straight-line basis with estimated useful lives ranging from 1 to
35 years. Amortization expense was $222 million, $253 million and $308 million for the years ended December 31,
2022, 2021 and 2020, respectively.
Estimated amortization expense for each of the subsequent five fiscal years is expected to be as follows:
Year
2023
2024
2025
2026
2027
Estimated
Amortization
Expense
$
245
223
182
135
114
NOTE 6. CONTRACT AND OTHER DEFERRED ASSETS
Contract assets reflect revenue earned in excess of billings on our long-term contracts to construct technically
complex equipment, provide long-term product service and maintenance or extended warranty arrangements and
other deferred contract related costs. Our long-term product service agreements are provided by our IET segment.
Our long-term equipment contracts are provided by both our IET and OFSE segments. Contract assets are
comprised of the following at December 31:
2022
2021
Long-term product service agreements
$
Long-term equipment contracts and certain other service agreements
Contract assets (total revenue in excess of billings)
392 $
955
1,347
125
31
$
1,503 $
589
825
1,414
156
28
1,598
Deferred inventory costs
Non-recurring engineering costs
Contract and other deferred assets
Revenue recognized during the years ended December 31, 2022 and 2021 from performance obligations
satisfied (or partially satisfied) in previous years related to our long-term service agreements was $20 million and
$14 million, respectively. This includes revenue recognized from revisions to cost or billing estimates that may
affect a contract’s total estimated profitability resulting in an adjustment of earnings.
Baker Hughes Company 2022 Form 10-K | 66
Baker Hughes Company
Notes to Consolidated Financial Statements
NOTE 7. PROGRESS COLLECTIONS AND DEFERRED INCOME
Contract liabilities include progress collections, which reflects billings in excess of revenue, and deferred income
on our long-term contracts to construct technically complex equipment, long-term product maintenance or extended
warranty arrangements. Contract liabilities are comprised of the following at December 31:
Progress collections
Deferred income
Progress collections and deferred income (contract liabilities)
2022
2021
$
$
3,713 $
109
3,822 $
3,108
124
3,232
Revenue recognized during the years ended December 31, 2022 and 2021 that was included in the contract
liabilities at the beginning of the year was $2,185 million and $2,398 million, respectively.
NOTE 8. LEASES
Our leasing activities primarily consist of operating leases for administrative offices, manufacturing facilities,
research centers, service centers, sales offices and certain equipment.
The following table presents operating lease expense:
Operating Lease Expense
Long-term fixed lease
Long-term variable lease
Short-term lease (1)
Total operating lease expense
2022
2021
2020
$
$
254 $
48
477
779 $
255 $
32
440
727 $
288
25
477
790
(1)
Leases with a term of one year or less, including leases with a term of one month or less.
Cash flows used in operating activities for operating leases approximates our expense for the years ended
December 31, 2022, 2021 and 2020.
As of December 31, 2022, maturities of our operating lease liabilities are as follows:
Year
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: imputed interest
Total
$
$
Amounts recognized in the consolidated statements of financial position for operating leases are as follows:
All other current liabilities
All other liabilities
Total
2022
2021
$
$
189 $
552
741 $
Operating
Leases
214
175
119
91
58
203
860
119
741
196
624
820
Baker Hughes Company 2022 Form 10-K | 67
Baker Hughes Company
Notes to Consolidated Financial Statements
Right-of-use assets of $757 million and $822 million as of December 31, 2022 and 2021, respectively, were
included in "All other assets" in our consolidated statements of financial position. The weighted-average remaining
lease term for our operating leases was approximately seven years and nine years for the years ended
December 31, 2022 and 2021, respectively. The weighted-average discount rate used to determine the operating
lease liability as of December 31, 2022 and 2021 was 3.1% and 3.3%, respectively.
NOTE 9. BORROWINGS
The carrying value of our short-term and long-term borrowings are comprised of the following at December 31:
2022
2021
Amount
Effective
Interest
Rate (1)
Amount
Effective
Interest
Rate (1)
Short-term borrowings
1.231% Senior Notes due December 2023
$
Other borrowings
Total short-term borrowings
Long-term borrowings
1.231% Senior Notes due December 2023
8.55% Debentures due June 2024 (2)
2.061% Senior Notes due December 2026
3.337% Senior Notes due December 2027
6.875% Notes due January 2029 (2)
3.138% Senior Notes due November 2029
4.486% Senior Notes due May 2030
5.125% Senior Notes due September 2040 (2)
4.080% Senior Notes due December 2047
Other long-term borrowings
Total long-term borrowings
Total borrowings
$
649
29
677
—
114
597
1,277
273
523
497
1,286
1,338
75
5,980
6,658
1.5 % $
2.9 %
— %
4.1 %
2.4 %
3.8 %
3.9 %
3.2 %
4.6 %
4.2 %
4.1 %
4.2 %
$
—
40
40
647
118
597
1,335
279
522
497
1,292
1,337
63
6,687
6,727
—
4.5 %
1.5 %
4.1 %
2.2 %
3.2 %
4.0 %
3.2 %
4.6 %
4.2 %
4.1 %
2.9 %
(1) Effective interest rate is based on the carrying value including issuance costs, interest rate swaps, and step-up
adjustments from the Baker Hughes Incorporated ("BHI") acquisition recorded for certain Senior Notes and Debentures.
(2) Represents long-term fixed rate debt obligations assumed in connection with the acquisition of BHI.
The carrying value of our short-term and long-term borrowings include issuance costs, changes in fair value of
the debt instrument hedged by interest rate swaps, and step-up adjustments for the BHI acquisition. At
December 31, 2022 and 2021, these adjustments resulted in a net increase to the carrying value of our borrowings
totaling $91 million and $162 million, respectively. The estimated fair value of total borrowings at December 31,
2022 and 2021 was $5,863 million and $7,328 million, respectively. For a majority of our borrowings the fair value
was determined using quoted period-end market prices. Where market prices are not available, we estimate fair
values based on valuation methodologies using current market interest rate data adjusted for our non-performance
risk.
Maturities of debt for each of the five years in the period ending December 31, 2027, and in the aggregate
thereafter, are listed in the table below:
Total debt
$
677 $
150 $
14 $
611 $ 1,280 $
3,926
2023
2024
2025
2026
2027
Thereafter
Baker Hughes Company 2022 Form 10-K | 68
Baker Hughes Company
Notes to Consolidated Financial Statements
BHH LLC has a $3 billion committed unsecured revolving credit facility ("the Credit Agreement") with
commercial banks maturing in December 2024. In addition, we have a commercial paper program with
authorization up to $3 billion under which we may issue from time to time commercial paper with maturities of no
more than 397 days. The Credit Agreement contains certain customary representations and warranties, certain
customary affirmative covenants and certain customary negative covenants. Upon the occurrence of certain events
of default, BHH LLC's obligations under the Credit Agreement may be accelerated. Such events of default include
payment defaults to lenders under the Credit Agreement and other customary defaults. No such events of default
have occurred. At December 31, 2022 and 2021, there were no borrowings under either the Credit Agreement or
the commercial paper program.
Baker Hughes Co-Obligor, Inc. is a co-obligor, jointly and severally with BHH LLC on our long-term debt
securities. This co-obligor is a 100%-owned finance subsidiary of BHH LLC that was incorporated for the sole
purpose of serving as a corporate co-obligor of long-term debt securities and has no assets or operations other than
those related to its sole purpose. As of December 31, 2022, Baker Hughes Co-Obligor, Inc. is a co-obligor of our
long-term debt securities totaling $6,554 million.
Certain Senior Notes contain covenants that restrict BHH LLC's ability to take certain actions, including, but not
limited to, the creation of certain liens securing debt, the entry into certain sale-leaseback transactions and
engaging in certain merger, consolidation and asset sale transactions in excess of specified limits. At December 31,
2022, we were in compliance with all debt covenants.
NOTE 10. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PLANS
Certain of our employees are covered by Company sponsored pension plans. We also maintain unfunded end-
of-service benefit plans that are mandated in certain countries in which we operate. Our primary plans disclosed in
2022 included four U.S. plans and eight non-U.S. plans, primarily in the UK and Germany, all with plan assets or
obligations greater than $20 million. We use a December 31 measurement date for these plans. These defined
benefit plans generally provide benefits to employees based on formulas recognizing length of service and
earnings; however, the majority of these plans are either frozen or closed to new entrants. We also provide certain
postretirement health care benefits, through unfunded plans, to a closed group of U.S. employees who retire and
meet certain age and service requirements. The accumulated postretirement benefit obligation related to these
plans was $37 million and $50 million at December 31, 2022 and 2021, respectively.
Funded Status
The funded status position represents the difference between the benefit obligation and the plan assets. Our
primary plans consist of seven funded plans and five unfunded plans. The projected benefit obligation ("PBO") for
pension benefits represents the actuarial present value of benefits attributed to employee services and
compensation and includes an assumption about future compensation levels. The accumulated benefit obligation
("ABO") is the actuarial present value of pension benefits attributed to employee service to date at present
compensation levels. The ABO differs from the PBO in that the ABO does not include any assumptions about future
compensation levels.
Baker Hughes Company 2022 Form 10-K | 69
Baker Hughes Company
Notes to Consolidated Financial Statements
Below is the reconciliation of the beginning and ending balances of benefit obligations, fair value of plan assets
and the funded status of our defined benefit plans ("Pension Benefits").
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Actuarial gain (1)
Benefits paid
Settlements
Acquisition
Other
Foreign currency translation adjustments
Benefit obligation at end of year
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Benefits paid
Settlements
Acquisition
Foreign currency translation adjustments
Fair value of plan assets at end of year
Funded status - underfunded at end of year
Accumulated benefit obligation
Pension Benefits
2022
2021
3,550 $
23
78
(928)
(119)
(24)
202
—
(148)
2,634
3,147
(850)
32
(119)
(24)
214
(134)
2,266
(368) $
3,806
27
64
(154)
(111)
(33)
—
(7)
(42)
3,550
3,202
83
28
(111)
(33)
—
(22)
3,147
(403)
2,595 $
3,497
$
$
$
(1) The actuarial gain was primarily related to a change in the discount rate used to measure the benefit obligation for our
plans in 2022 and 2021.
The amounts recognized in the consolidated statements of financial position consist of the following at
Pension Benefits
2022
2021
$
$
58 $
(15)
(411)
(368) $
109
(17)
(495)
(403)
December 31:
Noncurrent assets
Current liabilities
Noncurrent liabilities
Net amount recognized
Baker Hughes Company 2022 Form 10-K | 70
Baker Hughes Company
Notes to Consolidated Financial Statements
Information for the plans with ABOs and PBOs in excess of plan assets is as follows at December 31:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Pension Benefits
2022
2021
$
$
$
1,143 $
1,103 $
717 $
1,476
1,423
964
We have a U.S. non-qualified supplemental pension plan (“BH SPP”) for certain employees which are included
in the benefit obligations and funded status in the tables above. In order to meet a portion of our obligations of the
BH SPP, we have established a trust comprised primarily of mutual fund assets. The value of these assets were
$34 million and $45 million as of December 31, 2022 and 2021, respectively. These assets are not included as plan
assets or in the funded status amounts in the tables above and below.
Net Periodic Cost
The components of net periodic cost are as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service credit
Amortization of net actuarial loss
Curtailment / settlement loss
Net periodic cost
Pension Benefits
2022
2021
2020
$
$
23 $
78
(114)
1
27
2
17 $
27 $
64
(130)
1
40
2
4 $
27
77
(121)
1
34
10
28
The service cost component of the net periodic cost is included in "operating income (loss)" and all other
components are included in the "Other non-operating income (loss), net" caption of the consolidated statements of
income (loss).
Assumptions Used in Benefit Calculations
Accounting requirements necessitate the use of assumptions to reflect the uncertainties and the length of time
over which the pension obligations will be paid. The actual amount of future benefit payments will depend upon
when participants retire, the amount of their benefit at retirement and how long they live. To reflect the obligation in
today’s dollars, we discount the future payments using a rate that matches the time frame over which the payments
are expected to be made. We also need to assume a long-term rate of return that will be earned on investments
used to fund these payments.
Another assumption used is the interest crediting rate for our U.S. qualified cash balance plan. Under the
provisions of this pension plan, a hypothetical cash balance account has been established for each participant.
Such accounts receive quarterly interest credits based on a prescribed formula.
Weighted average assumptions used to determine benefit obligations for these plans are as follows:
Discount rate
Rate of compensation increase
Interest crediting rate
Pension Benefits
2022
2021
4.89 %
3.30 %
4.31 %
2.15 %
3.21 %
2.60 %
Baker Hughes Company 2022 Form 10-K | 71
Baker Hughes Company
Notes to Consolidated Financial Statements
Weighted average assumptions used to determine net periodic cost for these plans are as follows:
Discount rate
Expected long-term return on plan assets
Interest crediting rate
Pension Benefits
2022
2021
2020
2.15 %
3.85 %
2.60 %
1.66 %
4.07 %
2.60 %
2.34 %
4.20 %
2.60 %
We determine the discount rate using a bond matching model, whereby the weighted average yields on high-
quality fixed-income securities have maturities consistent with the timing of benefit payments. Lower discount rates
increase the size of the benefit obligations while higher discount rates reduce the size of the benefit obligation. The
compensation assumption is used in our active plans to estimate the annual rate at which the pay for plan
participants will grow. If the rate of growth assumed increases, the size of the pension obligations will increase.
The expected return on plan assets is the estimated long-term rate of return that will be earned on the
investments used to fund the pension obligations. To determine this rate, we consider the current and target
composition of plan investments, our historical returns earned, and our expectations about the future.
Accumulated Other Comprehensive Loss
The amount recorded before-tax in accumulated other comprehensive loss related to our defined benefit plans
consists of the following at December 31:
Net actuarial loss
Net prior service cost
Total
Plan Assets
Pension Benefits
2022
2021
$
$
348 $
15
363 $
365
17
382
We have investment committees that meet regularly to review portfolio returns and to determine asset-mix
targets based on asset/liability studies. Third-party investment consultants assist these committees in developing
asset allocation strategies to determine our expected rates of return and expected risk for various investment
portfolios. The investment committees considered these strategies in the formal establishment of the current asset-
mix targets based on the projected risk and return levels for all major asset classes.
Baker Hughes Company 2022 Form 10-K | 72
Baker Hughes Company
Notes to Consolidated Financial Statements
The table below presents the fair value of the plan assets at December 31:
Debt securities
Fixed income and cash investment funds
$
1,482 $
1,890
2022
2021
Equity securities
Global equity securities (1)
U.S. equity securities (1)
Insurance contracts
Real estate
Private equities
Other investments (2)
Total plan assets
180
102
100
53
37
313
$
2,266 $
250
222
112
59
48
566
3,147
(1)
Include direct investments and investment funds.
(2) Consists primarily of asset allocation fund investments.
Plan assets valued using Net Asset Value ("NAV") as a practical expedient amounted to $2,157 million and
$3,028 million as of December 31, 2022 and 2021, respectively. The percentages of plan assets valued using NAV
by investment fund type for equity securities, fixed income and cash, and alternative investments were 13%, 69%,
and 18% as of December 31, 2022, respectively, and 16%, 62%, and 22% as of December 31, 2021, respectively.
Those investments that were measured at fair value using NAV as a practical expedient were excluded from the fair
value hierarchy. The practical expedient was not applied for investments with a fair value of $109 million and $119
million as of December 31, 2022 and 2021, respectively. There were investments classified within Level 3 of $100
million and $112 million for non U.S. insurance contracts as of December 31, 2022 and 2021, respectively.
Other
In April 2022, we initiated the termination of one of our fully funded frozen U.S. defined benefit pension plans
(the "Plan"), which would result in the full settlement of our Plan obligations, which at December 31, 2022 was $286
million. The distribution of Plan assets from the pension trust fund pursuant to the termination will not be made until
the Plan termination satisfies all regulatory requirements, which we currently expect to occur by the end of 2023.
We do not expect the termination to have a material impact on our financial condition, results of operations or cash
flows.
Funding Policy
The funding policy for our Pension Benefits is to contribute amounts sufficient to meet minimum funding
requirements as set forth in employee benefit and tax laws plus such additional amounts as we may determine to be
appropriate. In 2022, we contributed approximately $32 million, which includes benefit payments made directly to
the employee for our unfunded plans. We anticipate we will contribute between approximately $15 million to $20
million to our pension plans in 2023.
Baker Hughes Company 2022 Form 10-K | 73
Baker Hughes Company
Notes to Consolidated Financial Statements
The following table presents the expected benefit payments for Pension Benefits over the next 10 years. For
funded Company sponsored plans, the benefit payments are made by the respective pension trust funds.
Year
2023 (1)
2024
2025
2026
2027
2028-2032
$
Pension
Benefits
447
129
133
138
139
730
(1)
Includes $286 million related to the Plan termination discussed above.
DEFINED CONTRIBUTION PLANS
Our primary defined contribution plan during 2022 was the Company-sponsored U.S. 401(k) plan ("401(k)
Plan"). The 401(k) Plan allows eligible employees to contribute portions of their eligible compensation to an
investment trust. The Company matches employee contributions at the rate of $1.00 per $1.00 employee
contribution for the first 5% of the employee's eligible compensation, and such contributions vest immediately. In
addition, we make cash contributions for all eligible employees of 4% of their eligible compensation and such
contributions are fully vested after three years of employment. The 401(k) Plan provides several investment
options, for which the employee has sole investment discretion; however, the 401(k) Plan does not offer the
Company's common stock as an investment option. Our costs for the 401(k) Plan and several other U.S. and non-
U.S. defined contribution plans amounted to $212 million and $194 million in 2022 and 2021, respectively.
We have two non-qualified defined contribution plans that are invested through trusts. The assets and
corresponding liabilities were $256 million and $322 million at December 31, 2022 and 2021, respectively, and are
included in the captions "All other assets" and "Liabilities for pensions and other postretirement benefits,"
respectively, in our consolidated statements of financial position.
NOTE 11. INCOME TAXES
The provision for income taxes is comprised of the following:
Current:
U.S.
Foreign
Total current
Deferred:
U.S.
Foreign
Total deferred
Provision for income taxes
2022
2021
2020
$
$
6 $
489
495
40
65
105
600 $
11 $
614
625
(24)
157
133
758 $
(59)
458
399
11
149
160
559
On August 16, 2022, the U.S. enacted The Inflation Reduction Act which included a number of additional credits
and deductions for businesses and individuals. The tax provisions of this law, particularly the adoption of the
corporate book minimum tax provision, are not effective until 2023. Currently, the Company does not believe the
corporate book minimum tax provision, or any of the other tax provisions, will have a material impact on the
Company for 2023, however, we will continue to monitor the future impact to Baker Hughes related to this new law.
Further, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), which was enacted on March 27,
2020 in the U.S. in response to the COVID-19 pandemic, contained measures to assist companies, including
Baker Hughes Company 2022 Form 10-K | 74
Baker Hughes Company
Notes to Consolidated Financial Statements
allowing net operating losses originating in 2018, 2019, or 2020 to be carried back up to five years. During 2020,
we elected to carry back losses to 2014 and accordingly recognized a $117 million tax benefit. We received the
cash refunds related to this benefit during 2021.
The geographic sources of income (loss) before income taxes are as follows:
U.S.
Foreign
Income (loss) before income taxes
2022
2021
2020
$
$
(698) $
720
22 $
(724) $
1,152
428 $
(14,288)
(914)
(15,202)
The provision for income taxes differs from the amount computed by applying the U.S. statutory income tax rate
to the loss or income before income taxes for the reasons set forth below for the years ended December 31:
Income (loss) before income taxes
Taxes at the U.S. federal statutory income tax rate
Impact of goodwill impairment
Effect of foreign operations (1)
Tax expense (benefit) due to unrecognized tax benefits
Tax impact of partnership structure
Change in valuation allowances
CARES Act
Other - net
Provision for income taxes (2)
Actual income tax rate
2022
2021
$
22
$
428
$
5
—
338
(7)
6
164
—
94
90
—
216
201
137
70
—
44
$
600
$
758
$
2020
(15,202)
(3,192)
3,102
148
35
(33)
494
(117)
122
559
2,727.3 %
177.1 %
(3.7) %
(1) For December 31, 2022, $140 million of this amount relates to the charges associated with the sale and suspension of
our Russia operations.
(2) For December 31, 2021, $121 million of this amount was previously indemnified under the Tax Matters Agreement with
GE of which $119 million was included in tax expense due to unrecognized tax benefits. In December 2022, the
Company and GE entered into an agreement to terminate the Tax Matters Agreement. See below for further
information.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as
operating loss and tax credit carryforwards.
Baker Hughes Company 2022 Form 10-K | 75
Baker Hughes Company
Notes to Consolidated Financial Statements
The tax effects of our temporary differences and carryforwards are as follows at December 31:
Deferred tax assets:
Operating & capital loss carryforwards
Tax credit & other carryforwards
Investment in partnership
Property
Employee benefits
Goodwill and other intangibles
Receivables
Inventory
Other
Total deferred income tax asset
Valuation allowances
Total deferred income tax asset after valuation allowance
Deferred tax liabilities:
Other
Total deferred income tax liability
Net deferred tax asset
2022
2021
$
$
2,074 $
1,087
846
128
62
46
94
52
163
4,552
(4,090)
462
(34)
(34)
428 $
2,297
1,183
457
156
116
97
72
61
111
4,550
(3,928)
622
(14)
(14)
608
At December 31, 2022, we had approximately $399 million of non-U.S. tax credits which may be carried forward
indefinitely under applicable foreign law, $542 million of U.S. foreign tax credits and $146 million of other U.S.
Federal and state tax credits and other carryforwards, the majority of which will expire after tax year 2027 under
U.S. Federal and state tax law. Additionally, we had $1,977 million of net operating loss carryforwards ("NOLs"), of
which approximately $301 million will expire within five years, $515 million will expire between six years and 20
years, and the remainder can be carried forward indefinitely. Lastly, we had $97 million of capital loss
carryforwards, the majority of which will expire within five years.
We record a valuation allowance when it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate
sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions. At
December 31, 2022, $4,090 million of valuation allowances are recorded against various deferred tax assets,
including foreign operating and capital losses of $1,692 million, U.S. operating and capital losses of $116 million,
U.S. foreign and non-U.S. tax credit carryforwards of $936 million, other tax credit carryforwards of $109 million, and
certain other U.S. and foreign deferred tax assets of $1,237 million. There are $266 million of deferred tax assets
related to NOLs and $196 million of various other deferred tax assets without a valuation allowance as we expect
that the deferred tax assets will be realized within the carryforward period.
Indefinite reinvestment is determined by management’s intentions concerning the future operations of the
Company. In cases where repatriation would otherwise incur significant withholding or income taxes, these
earnings have been indefinitely reinvested in the Company's active non-U.S. business operations. As of
December 31, 2022, the cumulative amount of undistributed foreign earnings is approximately $3,323 million.
Computation of the potential deferred tax liability associated with these undistributed earnings and any other basis
differences is not practicable.
At December 31, 2022, we had $496 million of tax liabilities for total gross unrecognized tax benefits related to
uncertain tax positions. In addition to these uncertain tax positions, we had $127 million and $42 million related to
interest and penalties, respectively, for total liabilities of $665 million for uncertain positions. If we were to prevail on
all uncertain positions, the net effect would result in an income tax benefit of approximately $584 million. The
remaining $81 million is comprised of $61 million for deferred tax assets that represent tax benefits that would be
received in different taxing jurisdictions or in a different character and $20 million increased valuation allowances.
Baker Hughes Company 2022 Form 10-K | 76
Baker Hughes Company
Notes to Consolidated Financial Statements
The following table presents the changes in our gross unrecognized tax benefits included in the consolidated
statements of financial position.
Asset / (Liability)
Balance at beginning of year
Additions for tax positions of the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements with tax authorities
Lapse of statute of limitations
Balance at end of year
2022
2021
$
(531) $
(19)
(99)
100
24
29
(483)
(32)
(166)
42
95
13
$
(496) $
(531)
It is expected that the amount of unrecognized tax benefits will change in the next twelve months due to expiring
statutes, audit activity, tax payments, and competent authority proceedings related to transfer pricing or final
decisions in matters that are the subject of litigation in various taxing jurisdictions in which we operate. At
December 31, 2022, we had approximately $72 million of tax liabilities related to uncertain tax positions, each of
which are individually insignificant, and each of which are reasonably possible of being settled within the next twelve
months.
We conduct business in more than 120 countries and are subject to income taxes in most taxing jurisdictions in
which we operate, each of which may have multiple open years subject to examination. All Internal Revenue
Service examinations have been completed and closed through 2019 for the most significant U.S. returns. We
believe that we have made adequate provision for all income tax uncertainties.
OTHER
In connection with the merger between BHI and the oil and gas business of GE in July 2017, the Company and
BHH LLC had entered into a Tax Matters Agreement ("TMA") with GE. The TMA governed the administration and
allocation between the parties of tax liabilities and benefits arising prior to, as a result of, and subsequent to the
merger, including the respective rights, responsibilities, and obligations of the parties with respect to various other
tax matters. In December 2022, the Company and GE entered into an agreement which resulted in the settlement
of claims asserted under the TMA and the termination of the TMA. As a result, we recorded a charge of $81 million,
of which $21 million was a cash payment to GE. This charge is reported in the "Other non-operating income (loss),
net" caption of the consolidated statements of income (loss).
NOTE 12. STOCK-BASED COMPENSATION
The Company has the Long-Term Incentive Plan ("LTI Plan") under which we may grant restricted stock units
("RSU"), performance share units ("PSU"), stock options and other equity-based awards to employees and non-
employee directors providing services to the Company and our subsidiaries. The Company also provides an
Employee Stock Purchase Plan ("ESPP") for eligible employees. A total of up to 29.5 million shares of Class A
common stock are reserved and available for issuance pursuant to awards granted under the LTI Plan over its term
which expires on the date of the annual meeting of the Company in 2031. A total of 27.8 million shares of Class A
common stock are available for issuance as of December 31, 2022. This amount includes 20.2 million shares
remaining from the initial reserve and 7.6 million shares added due to forfeitures, cancellations, and shares withheld
to pay the employee's taxes, subject to the adjustments as provided in the LTI Plan.
Stock-based compensation cost was $207 million, $205 million and $210 million for the years ended December
31, 2022, 2021 and 2020, respectively. Stock-based compensation cost is measured at the date of grant based on
the calculated fair value of the award and is generally recognized on a straight-line basis over the vesting period of
the equity grant. The compensation cost is determined based on awards ultimately expected to vest; therefore, we
have reduced the cost for estimated forfeitures based on historical forfeiture rates. Forfeitures are estimated at the
time of grant and revised, if necessary, in subsequent periods to reflect actual forfeitures. There were no stock-
based compensation costs capitalized as the amounts were not material.
Baker Hughes Company 2022 Form 10-K | 77
Baker Hughes Company
Notes to Consolidated Financial Statements
Restricted Stock
We may grant to our officers, directors and key employees RSUs, where each unit represents the right to
receive, at the end of a stipulated period, one unrestricted share of stock with no exercise price. Certain RSUs are
subject to cliff or graded vesting, generally ranging over a period of three years, or over a one year period for non-
employee directors. Cash dividend equivalents are accumulated on RSUs and are payable upon vesting of the
awards. We determine the fair value of RSUs based on the market price of our common stock on the date of grant.
The following table presents the changes in RSUs outstanding and related information (in thousands, except
per unit prices):
Unvested balance at December 31, 2021
Granted
Vested
Forfeited
Unvested balance at December 31, 2022
Number of
Units
Weighted Average
Grant Date Fair
Value Per Unit
16,035 $
7,203
(7,719)
(1,177)
14,342 $
21.50
27.90
21.99
23.59
24.31
In 2022, the total intrinsic value of RSUs vested (defined as the value of shares awarded based on the price of
our common stock at vesting date) was $210 million and unvested RSUs was $424 million. The total grant date fair
value of RSUs vested in 2022 was $170 million. As of December 31, 2022, there was $181 million of total
unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted
average period of 1.77 years.
Performance Share Units
We may grant PSUs to certain officers and key employees. The PSUs are stock-based awards tied to
predefined company metrics and total shareholder return ("TSR"). PSUs generally cliff vest after a service period of
three years. Cash dividend equivalents are accumulated on certain PSUs and are payable upon vesting of the
awards. The fair value of the awards determined for the predefined company metrics are based on the market price
of our common stock on the date of grant. The fair value of the TSR awards are determined based on a Monte
Carlo simulation method.
The following table presents the changes in PSUs outstanding and related information (in thousands, except per
unit prices):
Unvested balance at December 31, 2021
Granted
Vested
Forfeited
Unvested balance at December 31, 2022
Number of
Units
Weighted Average
Grant Date Fair
Value Per Unit
3,702 $
1,380
(1,268)
(290)
3,525 $
22.57
30.76
22.70
24.64
25.56
The total intrinsic value of PSUs vested and unvested, (defined as the value of the shares awarded at the year-
end market price) was $44 million and $104 million, respectively, as of December 31, 2022. The total grant date fair
value of PSUs vested in 2022 was $29 million. Total unrecognized compensation cost related to unvested PSUs,
which is expected to be recognized over a weighted average period of 1.69 years, was $34 million as of
December 31, 2022.
Baker Hughes Company 2022 Form 10-K | 78
Baker Hughes Company
Notes to Consolidated Financial Statements
Stock Options
We previously granted stock options to our officers, directors and key employees. Stock options generally vest
in equal amounts over a vesting period of three years provided that the employee has remained continuously
employed by the Company through such vesting date. We have not granted stock options to officers, directors, or
key employees since 2019.
The following table presents the changes in stock options outstanding and related information (in thousands,
except per option prices):
Outstanding at December 31, 2021
Exercised
Expired
Outstanding and exercisable at December 31, 2022
Number of
Options
Weighted Average
Exercise Price
Per Option
5,249 $
(1,661)
(681)
2,907 $
31.25
25.82
36.97
33.02
The weighted average remaining contractual term for options outstanding and options exercisable at
December 31, 2022 was 4.3 years. The maximum contractual term of options outstanding is 6.1 years.
There were 530 thousand, 850 thousand and 1,553 thousand options that vested in 2022, 2021 and 2020,
respectively. The total fair value of options vested was $3 million, $7 million and $14 million, in 2022, 2021 and
2020, respectively. Unrecognized compensation cost related to unvested stock options was immaterial as of
December 31, 2022.
The total intrinsic value of stock options exercised (defined as the amount by which the market price of our
common stock on the date of exercise exceeds the exercise price of the option) in 2022 was $12 million. The total
intrinsic value of stock options outstanding and options exercisable at December 31, 2022 was $5 million. The
intrinsic value of stock options outstanding is calculated as the amount by which the quoted price of $29.53 of our
common stock as of the end of 2022 exceeds the exercise price of the options.
Employee Stock Purchase Plan
The ESPP provides for eligible employees to purchase shares of Class A common stock quarterly on an after-
tax basis in an amount between 1% and 20% of their annual pay at a 15% discount of the fair market value of our
Class A common stock at the end of each quarterly offering period. An employee may not purchase more
than $3,000 in any of the three-month measurement periods described above or $12,000 annually.
A total of 21.5 million shares of Class A common stock are authorized for issuance, and at December 31, 2022,
there were 10.5 million shares of Class A common stock reserved for future issuance.
NOTE 13. EQUITY
COMMON STOCK
We are authorized to issue 2 billion shares of Class A common stock, 1.25 billion shares of Class B common
stock and 50 million shares of preferred stock each of which have a par value of $0.0001 per share. The number of
shares of Class A common stock and Class B common stock outstanding at December 31, 2022 is 1,006 million and
nil, respectively. We have not issued any preferred stock. Each share of Class A and Class B common stock and
the associated membership interest in BHH LLC form a paired interest. While each share of Class B common stock
has equal voting rights to a share of Class A common stock, it has no economic rights, meaning holders of Class B
common stock have no right to dividends or any assets in the event of liquidation of the Company. Class B
common stock is entitled through their ownership of BHH LLC common units ("LLC Units") to receive distributions
on an equal amount of any dividend paid by the Company. GE previously owned all the issued and outstanding
Baker Hughes Company 2022 Form 10-K | 79
Baker Hughes Company
Notes to Consolidated Financial Statements
Class B common stock, however, during the fourth quarter of 2022, GE completed the exchange of their remaining
Class B common stock and as of December 31, 2022, GE no longer owns any Class B common stock nor the
associated common units in BHH LLC.
In 2022, our Board of Directors authorized an increase to our repurchase program of $2 billion of additional
Class A common stock and LLC units for each of the Company and BHH LLC, respectively, increasing its existing
repurchase authorization of $2 billion to $4 billion. We expect to fund the repurchase program from cash generated
from operations, and we expect to make share repurchases from time to time subject to the Company's capital plan,
market conditions, and other factors, including regulatory restrictions. The repurchase program may be suspended
or discontinued at any time and does not have a specified expiration date. In 2022 and 2021, the Company and
BHH LLC repurchased and canceled 29.7 million and 17.6 million shares of Class A common stock and LLC Units,
each for $828 million and $434 million, representing an average price per share of $27.91 and $24.63, respectively.
As of December 31, 2022, the Company and BHH LLC had authorization remaining to repurchase up to
approximately $2.8 billion of its Class A common stock and LLC Units, respectively.
The following table presents the changes in the number of shares outstanding (in thousands):
Balance at beginning of year
Issue of shares upon vesting of restricted stock units (1)
Issue of shares on exercises of stock options (1)
Issue of shares for employee stock purchase plan
Exchange of Class B common stock for Class A common stock (2)
Repurchase and cancellation of Class A common stock
Balance at end of year
2022
2021
Class A
Common
Stock
Class B
Common
Stock
Class A
Common
Stock
Class B
Common
Stock
909,142 116,548 723,999 311,433
6,316
1,632
2,017
—
—
—
4,968
408
2,510
—
—
—
116,548 (116,548) 194,885 (194,885)
(29,694)
—
(17,628)
—
1,005,960
— 909,142 116,548
(1) Share amounts reflected above are net of shares withheld to satisfy the employee's tax withholding obligation.
(2) When shares of Class B common stock, together with associated LLC Units, are exchanged for shares of Class A
common stock pursuant to the Exchange Agreement, such shares of Class B common stock are canceled.
During 2022 and 2021, the Company declared and paid aggregate regular dividends of $0.73 and $0.72 per
share, respectively, to holders of record of the Company's Class A common stock.
Baker Hughes Company 2022 Form 10-K | 80
Baker Hughes Company
Notes to Consolidated Financial Statements
ACCUMULATED OTHER COMPREHENSIVE LOSS ("AOCL")
The following table presents the changes in accumulated other comprehensive loss, net of tax:
Foreign
Currency
Translation
Adjustments
Cash Flow
Hedges
Benefit
Plans
Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2020
$
(1,464) $
3 $
(317) $
(1,778)
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Deferred taxes
Other comprehensive income (loss)
Less: Other comprehensive income (loss) attributable to
noncontrolling interests
Less: Reallocation of AOCL based on change in ownership
of BHH LLC Units
Balance at December 31, 2021
Other comprehensive income (loss) before
reclassifications
Amounts reclassified from accumulated other
comprehensive loss
Deferred taxes
Other comprehensive income (loss)
Less: Other comprehensive loss attributable to
noncontrolling interests
(344)
(11)
135
39
—
(7)
2
38
(3)
(305)
(16)
170
(38)
(3)
25
(220)
70
(1)
(151)
(16)
394
(2,125)
—
(10)
78
(250)
472
(2,385)
(294)
25
—
(269)
(3)
(1)
3
—
2
—
2
27
(43)
(14)
—
(293)
55
(43)
(281)
(3)
Less: Reallocation of AOCL based on change in ownership
of BHH LLC Units
Balance at December 31, 2022
275
1
32
308
$
(2,666) $
(9) $
(296) $
(2,971)
The amounts reclassified from accumulated other comprehensive loss during the years ended December 31,
2022 and 2021 represent (i) gains (losses) reclassified on cash flow hedges when the hedged transaction occurs,
(ii) the amortization of net actuarial gain (loss), prior service credit, settlements, and curtailments which are included
in the computation of net periodic pension cost (see "Note 10. Employee Benefit Plans" for additional details), and
(iii) the release of foreign currency translation adjustments (see "Note 20. Restructuring, Impairment and Other" for
additional details).
NOTE 14. EARNINGS PER SHARE
Basic and diluted net income (loss) per share of Class A common stock is presented below:
(In millions, except per share amounts)
2022
2021
2020
Net loss
Less: Net income (loss) attributable to noncontrolling interests
Net loss attributable to Baker Hughes Company
$
$
(578) $
23
(601) $
(330) $
(111)
(219) $
(15,761)
(5,821)
(9,940)
Weighted average shares outstanding:
Class A basic & diluted
Net loss per share attributable to common stockholders:
987
824
675
Class A basic & diluted
$
(0.61) $
(0.27) $
(14.73)
Baker Hughes Company 2022 Form 10-K | 81
Baker Hughes Company
Notes to Consolidated Financial Statements
Shares of our Class B common stock do not share in earnings or losses of the Company and are not
considered in the calculation of basic or diluted earnings per share ("EPS") above. As such, separate presentation
of basic and diluted EPS of Class B under the two class method has not been presented. The basic weighted
average shares outstanding for our Class B common stock were 30 million, 215 million, and 359 million for the
years ended December 31, 2022, 2021 and 2020, respectively. The basic weighted average shares outstanding for
both our Class A and Class B common stock combined were 1,017 million, 1,039 million, and 1,034 million for the
years ended December 31, 2022, 2021 and 2020, respectively.
An exchange agreement existed between GE, BHH LLC, and us, ("Exchange Agreement") where GE was
entitled to exchange its holding in our Class B common stock, and associated LLC Units, for Class A common stock
on a one-for-one basis (subject to adjustment in accordance with the terms of the Exchange Agreement) or, at the
option of Baker Hughes, an amount of cash equal to the aggregate value (determined in accordance with the terms
of the Exchange Agreement) of the shares of Class A common stock that would have otherwise been received by
GE in the exchange. In computing the dilutive effect, if any, that the aforementioned exchange would have on net
income (loss) per share, net income (loss) attributable to holders of Class A common stock would be adjusted due
to the elimination of the noncontrolling interests associated with the Class B common stock (including any tax
impact). For the three years ended December 31, 2022, 2021 and 2020, such exchange is not reflected in diluted
net income (loss) per share as the assumed exchange is not dilutive. As of December 31, 2022, GE no longer
holds any of our Class B common stock and associated LLC Units. See "Note 13. Equity" for further information.
For the years ended December 31, 2022, 2021, and 2020 we excluded all outstanding equity awards from the
computation of diluted net loss per share because their effect is antidilutive.
NOTE 15. FINANCIAL INSTRUMENTS
RECURRING FAIR VALUE MEASUREMENTS
Our assets and liabilities measured at fair value on a recurring basis consist of derivative instruments and
investment securities.
Assets
Derivatives
Investment securities
Total assets
Liabilities
Derivatives
Total liabilities
2022
2021
Net
Level 1 Level 2 Level 3
Balance Level 1 Level 2 Level 3
Net
Balance
$ — $
748
748
18 $ — $
—
18
—
—
18 $ — $
748 1,033
766 1,033
29 $ — $
—
29
8
8
29
1,041
1,070
—
$ — $
(86)
(86) $ — $
—
(86)
(86) $ — $
—
(49)
(49) $ — $
—
(49)
(49)
There were no transfers between Level 1, 2 and 3 during 2022.
The following table provides a reconciliation of recurring Level 3 fair value measurements for investment
securities:
Balance at beginning of year
Proceeds at maturity
Balance at end of year
2022
2021
$
$
8 $
(8)
— $
30
(22)
8
The most significant unobservable input used in the valuation of our Level 3 instruments is the discount rate.
Discount rates are determined based on inputs that market participants would use when pricing investments,
including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value of our
Baker Hughes Company 2022 Form 10-K | 82
Baker Hughes Company
Notes to Consolidated Financial Statements
investment securities. There are no unrealized gains or losses recognized in the consolidated statements of income
(loss) on account of any Level 3 instrument still held at the reporting date.
2022
2021
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Investment securities (1)
Non-U.S. debt securities
Equity securities
Total
$ — $ — $ — $
557
557 $
191
191 $ — $
—
$
— $
748
748 $
8 $ — $ — $
579
587 $
455
455 $
8
(1)
1,033
(1) $ 1,041
(1) Gains (losses) recorded to earnings related to these securities were $(271) million, $(843) million and $1.4 billion for the
years ended December 31, 2022, 2021, and 2020, respectively.
As of December 31, 2022 and 2021, our equity securities with readily determinable fair values are comprised
primarily of our investment in C3.ai, Inc. ("C3 AI") of $97 million and $270 million, respectively, and ADNOC Drilling
of $649 million and $741 million, respectively. We remeasured our investments to fair value based on quoted prices
in active markets.
At December 31, 2022 and 2021, our investment in C3 AI consists of 8,650,476 shares of Class A common
stock ("C3 AI Shares"). There were no C3 AI Shares sold during 2022. During 2021, we sold approximately 2.2
million of our C3 AI shares and received proceeds of $145 million. For the years ended December 31, 2022 and
2021, we recorded unrealized losses of $174 million and $1,085 million, respectively, from the net change in fair
value of our investment in C3 AI, which is reported in “Other non-operating income (loss), net” in our consolidated
statements of income (loss).
At December 31, 2022 and 2021, our investment in ADNOC Drilling consists of 800,000,000 shares. For the
years ended December 31, 2022 and 2021, we recorded an unrealized loss of $91 million and an unrealized gain of
$241 million, respectively, from the net change in fair value of our investment in ADNOC Drilling, which is reported in
“Other non-operating income (loss), net” in our consolidated statements of income (loss).
As of December 31, 2022 and 2021, $748 million and $1,041 million of total investment securities are recorded
in "All other current assets," respectively.
FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
Our financial instruments include cash and equivalents, current receivables, certain investments, accounts
payable, short and long-term debt, and derivative financial instruments. Except for long-term debt, the estimated
fair value of these financial instruments at December 31, 2022 and 2021 approximates their carrying value as
reflected in our consolidated financial statements. For further information on the fair value of our debt, see "Note 9.
Borrowings."
Baker Hughes Company 2022 Form 10-K | 83
Baker Hughes Company
Notes to Consolidated Financial Statements
DERIVATIVES AND HEDGING
We use derivatives to manage our risks and do not use derivatives for speculation. The table below
summarizes the fair value of all derivatives, including hedging instruments and embedded derivatives.
2022
2021
Assets
(Liabilities)
Assets
(Liabilities)
Derivatives accounted for as hedges
Currency exchange contracts
Interest rate swap contracts
Derivatives not accounted for as hedges
Currency exchange contracts and other
Total derivatives
$
$
1 $
—
17
18 $
— $
(69)
(17)
(86) $
— $
—
29
29 $
(3)
(10)
(36)
(49)
Derivatives are classified in the consolidated statements of financial position depending on their respective
maturity date. As of December 31, 2022 and 2021, $17 million and $28 million of derivative assets are recorded in
"All other current assets" and $1 million and $1 million are recorded in "All other assets" of the consolidated
statements of financial position, respectively. As of December 31, 2022 and 2021, $17 million and $39 million of
derivative liabilities are recorded in "All other current liabilities" and $69 million and $10 million are recorded in "All
other liabilities" of the consolidated statements of financial position, respectively.
FORMS OF HEDGING
Cash flow hedges
We use cash flow hedging primarily to reduce or eliminate the effects of foreign exchange rate changes on
purchase and sale contracts. Accordingly, the vast majority of our derivative activity in this category consists of
currency exchange contracts. Changes in the fair value of cash flow hedges are recorded in a separate component
of equity (referred to as "Accumulated Other Comprehensive Income", or "AOCI") and are recorded in earnings in
the period in which the hedged transaction occurs. See "Note 13. Equity" for further information on activity in AOCI
for cash flow hedges. The maximum term of cash flow hedges that hedge forecasted transactions was less than
one year at December 31, 2022 and 2021.
Fair Value Hedges
All of our long-term debt is comprised of fixed rate instruments. We are subject to interest rate risk on our debt
portfolio and may use interest rate swaps to manage the economic effect of fixed rate obligations associated with
certain debt. Under these arrangements, we agree to exchange, at specified intervals, the difference between fixed
and floating interest amounts calculated by reference to an agreed-upon notional principal amount.
As of December 31, 2022 and 2021, we had interest rate swaps with a notional amount of $500 million that
converted a portion of our $1,350 million aggregate principal amount of 3.337% fixed rate Senior Notes due 2027
into a floating rate instrument with an interest rate based on a LIBOR index as a hedge of its exposure to changes in
fair value that are attributable to interest rate risk. We concluded that the interest rate swap met the criteria
necessary to qualify for the short-cut method of hedge accounting, and as such, an assumption is made that the
change in the fair value of the hedged debt, due to changes in the benchmark rate, exactly offsets the change in the
fair value of the interest rate swaps. Therefore, the derivative is considered to be effective at achieving offsetting
changes in the fair value of the hedged liability, and no ineffectiveness is recognized. The mark-to-market of this fair
value hedge is recorded as gains or losses in interest expense and is equally offset by the gain or loss of the
underlying debt instrument, which also is recorded in interest expense.
Baker Hughes Company 2022 Form 10-K | 84
Baker Hughes Company
Notes to Consolidated Financial Statements
Economic Hedges
These derivatives are not designated as hedges from an accounting standpoint (and therefore we do not apply
hedge accounting to the relationship), but otherwise serve the same economic purpose as other hedging
arrangements. Economic hedges are marked to fair value through earnings each period.
The following table summarizes the gains (losses) from derivatives not designated as hedges in the
consolidated statements of income (loss):
Derivatives not designated as
hedging instruments
Consolidated statements of income
(loss) caption
2022
2021
2020
Currency exchange contracts (1) Cost of goods sold
Currency exchange contracts
Cost of services sold
Commodity derivatives
Cost of goods sold
Other derivatives
Total (2)
Other non-operating income (loss), net
$
24 $
18
(6)
2
$
38 $
(9) $
5
1
—
(3) $
59
62
2
8
131
(1) Excludes a loss of nil, gains of $7 million and losses of $14 million on embedded derivatives for the years ended
December 31, 2022, 2021 and 2020, respectively, as embedded derivatives are not considered to be hedging
instruments in our economic hedges.
(2) The effect on earnings of derivatives not designated as hedges is substantially offset by the change in fair value of the
economically hedged items in the current and future periods.
NOTIONAL AMOUNT OF DERIVATIVES
The notional amount of a derivative is the number of units of the underlying. A substantial majority of the
outstanding notional amount of $3.8 billion and $3.9 billion at December 31, 2022 and 2021, respectively, is related
to hedges of anticipated sales and purchases in foreign currency, commodity purchases, changes in interest rates,
and contractual terms in contracts that are considered embedded derivatives and for intercompany borrowings in
foreign currencies. We generally disclose derivative notional amounts on a gross basis to indicate the total
counterparty risk. Where we have gross purchase and sale derivative contracts for a particular currency, we look to
execute these contracts with the same counterparty to reduce our exposure. The notional amount of these
derivative instruments do not generally represent cash amounts exchanged by us and the counterparties, but rather
the nominal amount upon which changes in the value of the derivatives are measured.
COUNTERPARTY CREDIT RISK
Fair values of our derivatives can change significantly from period to period based on, among other factors,
market movements and changes in our positions. We manage counterparty credit risk (the risk that counterparties
will default and not make payments to us according to the terms of our agreements) on an individual counterparty
basis.
Baker Hughes Company 2022 Form 10-K | 85
Baker Hughes Company
Notes to Consolidated Financial Statements
NOTE 16. REVENUE RELATED TO CONTRACTS WITH CUSTOMERS
DISAGGREGATED REVENUE
We disaggregate our OFSE and IET segment revenue from contracts with customers by product lines. See
"Note 17. Segment Information" for further details.
Total Revenue
Well Construction
Completions, Intervention & Measurements
Production Solutions
Subsea & Surface Pressure Systems
Oilfield Services & Equipment
Gas Technology - Equipment
Gas Technology - Services
Total Gas Technology
Condition Monitoring
Inspection
Pumps, Valves & Gears
PSI & Controls
Total Industrial Technology
Industrial & Energy Technology
Total
2022
2021
2020
$
3,854 $
3,301 $
3,559
3,587
2,230
3,106
3,135
2,486
3,257
3,614
3,269
2,844
13,229
12,028
12,984
2,560
2,441
5,002
545
995
826
559
2,925
7,926
2,916
2,700
5,616
562
949
801
546
2,857
8,473
2,421
2,475
4,896
581
865
809
570
2,824
7,721
$
21,156 $
20,502 $
20,705
In addition, management views OFSE segment revenue from contracts with customers by geographic region:
Oilfield Services & Equipment Geographic Revenue
2022
2021
2020
North America
Latin America
Europe/CIS/Sub-Saharan Africa
Middle East/Asia
Oilfield Services & Equipment
REMAINING PERFORMANCE OBLIGATIONS
$
3,764 $
2,904 $
2,099
2,483
4,883
1,681
2,865
4,579
3,107
1,447
2,846
5,584
$
13,229 $
12,028 $
12,984
As of December 31, 2022 and 2021, the aggregate amount of the transaction price allocated to the unsatisfied
(or partially unsatisfied) performance obligations was $27.8 billion and $23.6 billion, respectively. As of
December 31, 2022, we expect to recognize revenue of approximately 57%, 70% and 88% of the total remaining
performance obligations within 2, 5, and 15 years, respectively, and the remaining thereafter. Contract
modifications could affect both the timing to complete as well as the amount to be received as we fulfill the related
remaining performance obligations.
NOTE 17. SEGMENT INFORMATION
The Company's segments are determined as those operations whose results are reviewed regularly by the chief
operating decision maker ("CODM"), who is our Chief Executive Officer, in deciding how to allocate resources and
assess performance. Each segment is organized and managed based upon the nature of our markets and
customers and consist of similar products and services.
In the third quarter of 2022, we announced a reorganization of the Company to create two operating segments
focused on different growth profiles and designed to simplify our operations and enhance profitability. Effective
Baker Hughes Company 2022 Form 10-K | 86
Baker Hughes Company
Notes to Consolidated Financial Statements
October 1, 2022, the two operating segments, also our reportable segments, are Oilfield Services & Equipment
(“OFSE”) and Industrial & Energy Technology (“IET”). The financial information for 2021 and 2020 have been recast
to conform to the new segment presentation.
We previously operated the Company through four segments. Through this reorganization, we merged the
Oilfield Services segment with the Oilfield Equipment segment to form the OFSE segment, and we merged the
Turbomachinery & Process Solutions segment with the Digital Solutions segment to form the IET segment. We
believe the new structure will allow each segment to better adapt to the quickly changing energy markets, and by
removing certain management layers, will upgrade a number of key operational processes across our businesses
and enhance their economies of scale. The following is a description of each segment’s business operations:
Oilfield Services & Equipment provides products and services for onshore and offshore oilfield operations
across the lifecycle of a well, ranging from exploration, appraisal, and development, to production, rejuvenation, and
decommissioning. OFSE is organized into four product lines: Well Construction, which encompasses drilling
services, drill bits, and drilling & completions fluids; Completions, Intervention, and Measurements, which
encompasses well completions, pressure pumping, and wireline services; Production Solutions, which spans
artificial lift systems and oilfield & industrial chemicals, and Subsea & Surface Pressure Systems, which
encompasses subsea projects services and drilling systems, surface pressure control, and flexible pipe systems.
Beyond its traditional oilfield concentration, OFSE is expanding its capabilities and technology portfolio to meet the
challenges of a net-zero future. These efforts include expanding into new energy areas such as geothermal and
CCUS, strengthening its digital architecture and addressing key energy market themes.
Industrial & Energy Technology provides technology solutions and services for mechanical-drive,
compression and power-generation applications across the energy industry, including oil and gas, liquefied natural
gas ("LNG") operations, downstream refining and petrochemical markets, as well as lower carbon solutions to
broader energy and industrial sectors. IET also provides equipment, software, and services that serve a wide range
of industries including petrochemical and refining, nuclear, aviation, automotive, mining, cement, metals, pulp and
paper, and food and beverage. IET is organized into six product lines - Gas Technology Equipment and Gas
Technology Services, collectively referred to as Gas Technology, and Condition Monitoring, Inspection, Pumps
Valves & Gears, and PSI & Controls, collectively referred to as Industrial Technology.
Segment revenue and operating income are determined based on the internal performance measures used by
the CODM to assess the performance of each segment in a financial period. The performance of our operating
segments is evaluated based on segment operating income (loss), which is defined as income (loss) before income
taxes before the following: net interest expense, net other non-operating income (loss), corporate expenses,
restructuring, impairment and other charges, separation related costs, inventory impairments, goodwill impairments
and certain gains and losses not allocated to the operating segments. Consistent accounting policies have been
applied by all segments, for all reporting periods. Intercompany revenue and expense amounts have been
eliminated within each segment to report on the basis that management uses internally for evaluating segment
performance. Summarized financial information for the Company's segments is shown in the following tables.
Segment revenue
Oilfield Services & Equipment
Industrial & Energy Technology
Total
2022
2021
2020
$
$
13,229 $
12,028 $
7,926
8,473
21,156 $
20,502 $
12,984
7,721
20,705
Baker Hughes Company 2022 Form 10-K | 87
Baker Hughes Company
Notes to Consolidated Financial Statements
Segment income (loss) before income taxes
2022
2021
2020
Oilfield Services & Equipment
Industrial & Energy Technology
Total segment
Corporate
Inventory impairment (1)
Goodwill impairment
Restructuring, impairment and other
Separation related
Other non-operating income (loss), net
Interest expense, net
$
1,201 $
830 $
1,135
2,336
(416)
(31)
—
(682)
(23)
(911)
(252)
1,177
2,006
(429)
—
—
(209)
(60)
(583)
(299)
506
998
1,504
(464)
(246)
(14,773)
(1,866)
(134)
1,040
(264)
Income (loss) before income taxes
$
22 $
428 $
(15,202)
(1)
Inventory impairments are reported in the "Cost of goods sold" caption of the consolidated statements of income (loss).
The following table presents total assets by segment at December 31:
Segment assets
Oilfield Services & Equipment
Industrial & Energy Technology
Total segment
Corporate and eliminations (1)
Total
2022
2021
$
17,181 $
12,286
29,467
4,714
$
34,181 $
17,950
11,480
29,430
5,878
35,308
(1) The assets in Corporate and eliminations consist primarily of cash, the Baker Hughes trade name, our investment in C3
AI, certain facilities, and certain other noncurrent assets. It also includes adjustments to eliminate intercompany
investments and receivables reflected within the total assets of each of our reportable segments.
The following table presents depreciation and amortization by segment:
Segment depreciation and amortization
Oilfield Services & Equipment
Industrial & Energy Technology
Total Segment
Corporate
Total
2022
2021
2020
$
845 $
874 $
197
1,042
19
208
1,082
23
$
1,061 $
1,105 $
1,072
216
1,288
29
1,317
The following table presents capital expenditures by segment:
Segment capital expenditures
Oilfield Services & Equipment
Industrial & Energy Technology
Total Segment
Corporate
Total
2022
2021
2020
$
$
791 $
183
974
15
989 $
659 $
182
841
15
856 $
743
196
939
35
974
Baker Hughes Company 2022 Form 10-K | 88
Baker Hughes Company
Notes to Consolidated Financial Statements
The following table presents consolidated revenue based on the location to where the product is shipped or the
services are performed. Other than the U.S., no other country accounted for more than 10% of our consolidated
revenue during the periods presented.
Revenue
U.S.
Non-U.S.
Total
2022
2021
2020
$
$
4,942 $
16,214
21,156 $
4,497 $
16,005
20,502 $
4,638
16,067
20,705
The following table presents net property, plant and equipment by its geographic location at December 31:
Property, plant and equipment - net
U.S.
Non-U.S.
Total
NOTE 18. RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS WITH GE
2022
2021
$
$
1,554 $
2,984
4,538 $
1,651
3,226
4,877
During the second quarter of 2022, GE's ownership interest in us and BHH LLC was reduced to less than 5%.
As a result, considering all aspects of our relationship with GE, as of June 30, 2022, we no longer consider GE a
related party. Below we provide our disclosures for purchases and sales with GE through June 30, 2022.
We had purchases with GE and its affiliates of $293 million during the six months ended June 30, 2022, and
$716 million and $804 million during the years ended December 31, 2021 and 2020, respectively. In addition, we
sold products and services to GE and its affiliates for $83 million during the six months ended June 30, 2022, and,
$185 million and $212 million during the years ended December 31, 2021 and 2020, respectively.
OTHER RELATED PARTIES
We have an aeroderivative joint venture ("Aero JV") we formed with GE in 2019. The Aero JV is jointly
controlled by GE and us, each with ownership interest of 50%, and therefore, we do not consolidate the JV. We had
purchases with the Aero JV of $528 million, $603 million, and $642 million during the years ended December 31,
2022, 2021 and 2020, respectively. We have $110 million and $86 million of accounts payable at December 31,
2022 and 2021, respectively, for products and services provided by the Aero JV in the ordinary course of business.
Sales of products and services and related receivables with the Aero JV were immaterial for the years ended
December 31, 2022, 2021 and 2020.
NOTE 19. COMMITMENTS AND CONTINGENCIES
LITIGATION
We are subject to legal proceedings arising in the ordinary course of our business. Because legal proceedings
are inherently uncertain, we are unable to predict the ultimate outcome of such matters. We record a liability for
those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated.
Based on the opinion of management, we do not expect the ultimate outcome of currently pending legal
proceedings to have a material adverse effect on our results of operations, financial position or cash flows.
However, there can be no assurance as to the ultimate outcome of these matters.
In January 2013, INEOS and Naphtachimie initiated expertise proceedings in Aix-en-Provence, France arising
out of a fire at a chemical plant owned by INEOS in Lavera, France, which resulted in a 15-day plant shutdown and
destruction of a steam turbine, which was part of a compressor train owned by Naphtachimie. The most recent
quantification of the alleged damages is €250 million. Two of the Company's subsidiaries (and 17 other companies)
Baker Hughes Company 2022 Form 10-K | 89
Baker Hughes Company
Notes to Consolidated Financial Statements
were notified to participate in the proceedings. On December 12, 2022, the expert issued his final report, which
found no liability on the part of the Company's subsidiaries.
On July 31, 2018, International Engineering & Construction S.A. ("IEC") initiated arbitration proceedings in New
York administered by the International Center for Dispute Resolution ("ICDR") against the Company and its
subsidiaries arising out of a series of sales and service contracts entered between IEC and the Company’s
subsidiaries for the sale and installation of LNG plants and related power generation equipment in Nigeria
("Contracts"). Prior to the filing of the IEC Arbitration, the Company’s subsidiaries made demands for payment due
under the Contracts. On August 15, 2018, the Company’s subsidiaries initiated a separate demand for ICDR
arbitration against IEC for claims of additional costs and amounts due under the Contracts. On October 10, 2018,
IEC filed a Petition to Compel Arbitration in the United States District Court for the Southern District of New York
against the Company seeking to compel non-signatory Baker Hughes entities to participate in the arbitration filed by
IEC. The complaint is captioned International Engineering & Construction S.A. et al. v. Baker Hughes, a GE
company, LLC, et al. No. 18-cv-09241 ("S.D.N.Y 2018"); this action was dismissed by the Court on August 13,
2019. In the arbitration, IEC alleges breach of contract and other claims against the Company and its subsidiaries
and seeks recovery of alleged compensatory damages, in addition to reasonable attorneys' fees, expenses and
arbitration costs. On March 15, 2019, IEC amended its request for arbitration to alleged damages of $591 million of
lost profits plus unspecified additional costs based on alleged non-performance of the contracts in dispute. The
arbitration hearing was held from December 9, 2019 to December 20, 2019. On March 3, 2020, IEC amended their
damages claim to $700 million of alleged loss cash flow or, in the alternative, $244.9 million of lost profits and
various costs based on alleged non-performance of the contracts in dispute, and in addition $4.8 million of
liquidated damages, $58.6 million in take-or-pay costs of feed gas, and unspecified additional costs of rectification
and take-or-pay future obligations, plus unspecified interest and attorneys' fees. On May 3, 2020, the arbitration
panel dismissed IEC's request for take-or-pay damages. On May 29, 2020, IEC quantified their claim for legal fees
at $14.2 million and reduced their alternative claim from $244.9 million to approximately $235 million. The
Company and its subsidiaries have contested IEC’s claims and are pursuing claims for compensation under the
contracts. On October 31, 2020, the ICDR notified the arbitration panel’s final award, which dismissed the majority
of IEC’s claims and awarded a portion of the Company’s claims. On January 27, 2021, IEC filed a petition to vacate
the arbitral award in the Supreme Court of New York, County of New York. On March 5, 2021, the Company filed a
petition to confirm the arbitral award, and on March 8, 2021, the Company removed the matter to the United States
District Court for the Southern District of New York. On November 16, 2021, the court granted the Company's
petition to confirm the award and denied IEC's petition to vacate. During the second quarter of 2022, IEC paid the
amounts owed under the arbitration award, which had an immaterial impact on the Company’s financial statements.
On February 3, 2022, IEC initiated another arbitration proceeding in New York administered by the ICDR against
certain of the Company’s subsidiaries arising out of the same project which formed the basis of the first arbitration.
On March 25, 2022, the Company's subsidiaries initiated a separate demand for ICDR arbitration against IEC for
claims of additional costs and amounts due. At this time, we are not able to predict the outcome of these
proceedings.
On March 15, 2019 and March 18, 2019, the City of Riviera Beach Pension Fund and Richard Schippnick,
respectively, filed in the Delaware Court of Chancery shareholder derivative lawsuits for and on the Company’s
behalf against GE, the then-current members of the Board of Directors of the Company and the Company as a
nominal defendant, related to the decision to (i) terminate the contractual prohibition barring GE from selling any of
the Company’s shares before July 3, 2019; (ii) repurchase $1.5 billion in the Company’s stock from GE; (iii) permit
GE to sell approximately $2.5 billion in the Company’s stock through a secondary offering; and (iv) enter into a
series of other agreements and amendments that will govern the ongoing relationship between the Company and
GE (collectively, the “2018 Transactions”). The complaints in both lawsuits allege, among other things, that GE, as
the Company’s controlling stockholder, and the members of the Company’s Board of Directors breached their
fiduciary duties by entering into the 2018 Transactions. The relief sought in the complaints includes a request for a
declaration that the defendants breached their fiduciary duties, that GE was unjustly enriched, disgorgement of
profits, an award of damages sustained by the Company, pre- and post-judgment interest, and attorneys’ fees and
costs. On March 21, 2019, the Chancery Court entered an order consolidating the Schippnick and City of Riviera
Beach complaints under consolidated C.A. No. 2019-0201-AGB, styled in re Baker Hughes, a GE company
derivative litigation. On May 10, 2019, Plaintiffs voluntarily dismissed their claims against the members of the
Company’s Conflicts Committee, and on May 15, 2019, Plaintiffs voluntarily dismissed their claims against former
Baker Hughes director Martin Craighead. On June 7, 2019, the defendants and nominal defendant filed a motion to
Baker Hughes Company 2022 Form 10-K | 90
Baker Hughes Company
Notes to Consolidated Financial Statements
dismiss the lawsuit on the ground that the derivative plaintiffs failed to make a demand on the Company’s Board of
Directors to pursue the claims itself, and GE and the Company’s Board of Directors filed a motion to dismiss the
lawsuit on the ground that the complaint failed to state a claim on which relief can be granted. The Chancery Court
denied the motions on October 8, 2019, except granted GE’s motion to dismiss the unjust enrichment claim against
it. On October 31, 2019, the Company’s Board of Directors designated a Special Litigation Committee and
empowered it with full authority to investigate and evaluate the allegations and issues raised in the derivative
litigation. The Special Litigation Committee filed a motion to stay the derivative litigation during its investigation. On
December 3, 2019, the Chancery Court granted the motion and stayed the derivative litigation until June 1, 2020.
On May 20, 2020, the Chancery Court granted an extension of the stay to October 1, 2020, and on September 29,
2020, the Court granted a further extension of the stay to October 15, 2020. On October 13, 2020, the Special
Litigation Committee filed its report with the Court. At this time, we are not able to predict the outcome of these
claims.
On August 13, 2019, Tri-State Joint Fund filed in the Delaware Court of Chancery, a shareholder class action
lawsuit for and on the behalf of itself and all similarly situated public stockholders of BHI against GE, the former
members of the Board of Directors of BHI, and certain former BHI Officers alleging breaches of fiduciary duty, aiding
and abetting, and other claims in connection with the combination of BHI and the oil and gas business ("GE O&G")
of GE ("the Transactions"). On October 28, 2019, City of Providence filed in the Delaware Court of Chancery a
shareholder class action lawsuit for and on behalf of itself and all similarly situated public shareholders of BHI
against GE, the former members of the Board of Directors of BHI, and certain former BHI Officers alleging
substantially the same claims in connection with the Transactions. The relief sought in these complaints include a
request for a declaration that Defendants breached their fiduciary duties, an award of damages, pre- and post-
judgment interest, and attorneys’ fees and costs. The lawsuits have been consolidated, and plaintiffs filed a
consolidated class action complaint on December 17, 2019 against certain former BHI officers alleging breaches of
fiduciary duty and against GE for aiding and abetting those breaches. The December 2019 complaint omitted the
former members of the Board of Directors of BHI, except for Mr. Craighead who also served as President and CEO
of BHI. Mr. Craighead and Ms. Ross, who served as Senior Vice President and Chief Financial Officer of BHI,
remain named in the December 2019 complaint along with GE. The relief sought in the consolidated complaint
includes a declaration that the former BHI officers breached their fiduciary duties and that GE aided and abetted
those breaches, an award of damages, pre- and post-judgment interest, and attorneys’ fees and costs. On or
around February 12, 2020, the defendants filed motions to dismiss the lawsuit on the grounds that the complaint
failed to state a claim on which relief could be granted. On or around October 27, 2020, the Chancery Court
granted GE’s motion to dismiss, and granted in part the motion to dismiss filed by Mr. Craighead and Ms. Ross,
thereby dismissing all of the claims against GE and Ms. Ross, and all but one of the claims against Mr. Craighead.
At this time, we are not able to predict the outcome of the remaining claim.
On December 11, 2019, BMC Software, Inc. (“BMC”) filed a lawsuit in federal court in the Southern District of
Texas against Baker Hughes, a GE company, LLC alleging trademark infringement, unfair competition, and unjust
enrichment, arising out of the Company’s use of its new logo and affiliated branding. On January 1, 2020, BMC
amended its complaint to add Baker Hughes Company. The relief sought in the complaint includes a request for
injunctive relief, an award of damages (including punitive damages), pre- and post-judgment interest, and attorneys’
fees and costs. On or around January 27, 2023, the parties entered into a confidential Settlement Agreement. Any
consideration contemplated by the Settlement Agreement is immaterial to the Company's financial statements.
In December 2020, the Company received notice that the SEC was conducting a formal investigation that the
Company understands was related to its books and records and internal controls regarding sales of its products and
services in projects impacted by U.S. sanctions. The Company cooperated with the SEC and provided requested
information. The Company also initiated an internal review with the assistance of external legal counsel regarding
internal controls and compliance related to U.S. sanctions requirements. While the Company's review was ongoing,
in September 2021, the Company voluntarily informed the Office of Foreign Assets Control ("OFAC") that non-U.S.
Baker Hughes affiliates in two foreign countries appear to have received payments, involving U.S. touchpoints, that
are subject to debt restrictions pursuant to applicable U.S. sanctions laws. In February 2022, OFAC informed the
Company that it has issued a cautionary letter and that it will not pursue a civil monetary penalty or further
enforcement action. The cautionary letter reflects OFAC’s final enforcement response to the Company’s voluntary
self-disclosure. The Company provided copies of its correspondence with OFAC to the SEC. On January 12, 2023,
Baker Hughes Company 2022 Form 10-K | 91
Baker Hughes Company
Notes to Consolidated Financial Statements
the Company was notified that the SEC had concluded its investigation and does not intend to recommend an
enforcement action against the Company.
We insure against risks arising from our business to the extent deemed prudent by our management and to the
extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be
sufficient to fully indemnify us against liabilities arising out of pending or future legal proceedings or other claims.
Most of our insurance policies contain deductibles or self-insured retentions in amounts we deem prudent and for
which we are responsible for payment. In determining the amount of self-insurance, it is our policy to self-insure
those losses that are predictable, measurable and recurring in nature, such as claims for automobile liability,
general liability and workers compensation.
ENVIRONMENTAL MATTERS
Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters when a governmental
authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company
reasonably believes will exceed a specified threshold. The Company uses a threshold of $1 million for such
proceedings. Applying this threshold, there are no environmental matters to disclose for this period.
Estimated remediation costs are accrued using currently available facts, existing environmental permits,
technology and enacted laws and regulations. Our cost estimates are developed based on internal evaluations and
are not discounted. Accruals are recorded when it is probable that we will be obligated to pay for environmental site
evaluation, remediation or related activities, and such costs can be reasonably estimated. As additional information
becomes available, accruals are adjusted to reflect current cost estimates. Ongoing environmental compliance
costs, such as obtaining or renewing environmental permits, installation of pollution control equipment and waste
disposal are expensed as incurred. Where we have been identified as a potentially responsible party in a U.S.
federal or state Comprehensive Environmental Response, Compensation and Liability Act ("Superfund") site, we
accrue our share, if known, of the estimated remediation costs of the site. This share is based on the ratio of the
estimated volume of waste we contributed to the site to the total volume of waste disposed at the site.
OTHER
In the normal course of business with customers, vendors and others, we have entered into off-balance sheet
arrangements, such as surety bonds for performance, letters of credit and other bank issued guarantees. We also
provide a guarantee to GE Capital on behalf of a customer who entered into a financing arrangement with GE
Capital. Total off-balance sheet arrangements were approximately $4.5 billion at December 31, 2022. It is not
practicable to estimate the fair value of these financial instruments. As of December 31, 2022, none of the off-
balance sheet arrangements either has, or is likely to have, a material effect on our financial position, results of
operations or cash flows. We also had commitments outstanding for purchase obligations for each of the five years
in the period ending December 31, 2027 of $1,584 million, $377 million, $267 million, $119 million and $113 million,
respectively, and $31 million in the aggregate thereafter.
We sometimes enter into consortium or similar arrangements for certain projects primarily in our OFSE
segment. Under such arrangements, each party is responsible for performing a certain scope of work within the
total scope of the contracted work, and the obligations expire when all contractual obligations are completed. The
failure or inability, financially or otherwise, of any of the parties to perform their obligations could impose additional
costs and obligations on us. These factors could result in unanticipated costs to complete the project, liquidated
damages or contract disputes.
Baker Hughes Company 2022 Form 10-K | 92
Baker Hughes Company
Notes to Consolidated Financial Statements
NOTE 20. RESTRUCTURING, IMPAIRMENT AND OTHER
We recorded restructuring, impairment and other charges of $682 million, $209 million, and $1,866 million
during the years ended December 31, 2022, 2021 and 2020, respectively.
RESTRUCTURING AND IMPAIRMENT CHARGES
In 2022, we recorded restructuring and impairment charges of $196 million. In the third quarter of 2022, we
announced a restructuring plan in conjunction with a change in our operating segments that was effective October
1, 2022. As a result, we incurred charges primarily related to employee termination expenses driven by actions
taken by the Company to facilitate the reorganization into two segments. In addition, property, plant and equipment
("PP&E") impairments and other costs were recorded related to exit activities at specific locations in our OFSE
segment to align with our current market outlook and rationalize our manufacturing supply chain footprint. See
"Note 17. Segment Information" for further information on the change in segments. We expect to incur additional
charges of approximately $100 million in 2023 in connection with our restructuring plan initiated in 2022, and
currently expect this plan to come to completion by the end of 2023.
In 2021, we recorded restructuring and impairment charges totaling $138 million. Charges incurred were
primarily related to the continuation of our overall strategy to restructure our business, which is designed to optimize
our structural costs for the year-over-year change in activity levels and market conditions.
In 2020, in response to the impact on our business from the COVID-19 pandemic and the significant decline in
oil and gas prices, we recorded restructuring and impairment charges totaling $903 million. Charges incurred were
primarily related to rationalizing certain product lines and restructuring our business to right-size our operations and
to address the challenging market conditions in the upstream oil and gas market.
The following table presents the restructuring and impairment charges by the impacted segment, however,
these charges are not included in the reported segment results.
Oilfield Services & Equipment
Industrial & Energy Technology
Corporate
Total
2022
2021
2020
$
$
121 $
36
39
196 $
121 $
11
6
138 $
The following table presents restructuring and impairment charges by type:
Property, plant and equipment
Employee-related termination expenses
Asset relocation costs
Contract termination fees
Other incremental costs
Total
OTHER CHARGES
2022
2021
2020
$
$
58 $
121
3
1
13
196 $
7 $
99
20
2
10
138 $
800
89
14
903
385
464
15
23
16
903
Other charges included in the "Restructuring, impairment and other" caption in the consolidated statements of
income (loss) were $486 million, $71 million, and $963 million for the years ended December 31, 2022, 2021 and
2020, respectively.
In 2022, other charges were primarily associated with our Russia operations. As a result of the ongoing conflict
between Russia and Ukraine that began in February of 2022, governments in the U.S., United Kingdom, European
Union, and other countries enacted sanctions against Russia and certain Russian interests. On March 19, 2022, we
Baker Hughes Company 2022 Form 10-K | 93
Baker Hughes Company
Notes to Consolidated Financial Statements
suspended any new investments in our Russia operations, but continued to comply with applicable laws and
regulations as we fulfilled contractual obligations. Over the course of the second quarter of 2022, we closely
monitored the developments in Ukraine and Russia and changes to sanctions all of which continued to make
ongoing operations increasingly complex and significantly more challenging. As a result, in the second quarter of
2022, we committed to a plan to sell part of our OFSE Russia business. The sale was completed in the fourth
quarter of 2022. See “Note 21. Business Dispositions and Acquisitions” for further information. In addition, given
that some of our activities are prohibited under applicable sanctions and almost all of our activities are
unsustainable in the current environment, we took actions to suspend substantially all of our operational activities
related to Russia. These actions resulted in other charges of $334 million recorded in the second quarter of 2022
primarily associated with the suspension of contracts including all our IET LNG contracts, and the impairment of
assets consisting primarily of contract assets, PP&E and reserve for accounts receivable. In addition to these
charges, we recorded inventory impairments of $31 million primarily in IET as a result of suspending our Russia
operations, which are reported in the “Cost of goods sold” caption in the consolidated statements of income (loss).
During 2022, we also recorded other charges of $84 million in our OFSE segment primarily related to the
impairment of PP&E and intangibles for the SPS business due to a decrease in the estimated future cash flows
driven by a decline in our long-term market outlook for this business, and $68 million in our IET segment primarily
related to a write-off of an equity method investment and the release of foreign currency translation adjustments.
In 2021, other charges were primarily related to certain litigation matters in our IET segment and the release of
foreign currency translation adjustments for certain restructured product lines in our IET segment.
In 2020, other charges were comprised of intangible asset impairments of $605 million driven by our decision to
exit certain businesses primarily in our OFSE segment, other long-lived asset impairments of $216 million ($124
million of intangible assets, $77 million of property, plant and equipment and $15 million of other assets) in our
OFSE segment, other charges of $73 million driven by certain litigation matters and the impairment of an equity
method investment primarily in corporate and the OFSE segment, and charges related to corporate facility
rationalization.
NOTE 21. BUSINESS DISPOSITIONS AND ACQUISITIONS
DISPOSITIONS
We completed several business dispositions over the past three years as described below. Any gain or loss on
a business disposition is reported in the "Other non-operating income (loss), net" caption of the consolidated
statements of income (loss).
•
•
•
During the second quarter of 2022, we took actions to suspend substantially all of our operational activities
related to Russia across the Company. In addition, we committed to a plan to sell part of our OFSE Russia
business, which met the criteria to be classified as held for sale and was measured and reported at the
lower of its carrying value or fair value less costs to sell which resulted in a loss before income taxes of
$426 million. In November 2022, we completed the sale of part of our OFSE Russia business to local
management for a nominal amount, which resulted in the recognition of an additional loss before income
taxes of $25 million.
In October 2021, we closed a transaction with Akastor ASA to create a joint venture company ("JV
Company") to deliver global offshore drilling solutions. We contributed our subsea drilling systems
business, a division of our OFSE segment, to the JV Company and received as consideration 50% of the
shares of the JV Company, cash of $70 million, and a promissory note of $80 million. The transaction
resulted in an immaterial gain.
In October 2020, we completed the sale of our surface pressure control flow business, a non-strategic
product line in our OFSE segment that provided surface wellhead and surface tree systems for the onshore
market. The sale resulted in a loss before income taxes of $137 million.
Baker Hughes Company 2022 Form 10-K | 94
Baker Hughes Company
Notes to Consolidated Financial Statements
•
In June 2020, we completed the sale of our rod lift systems ("RLS") business. RLS was part of our OFSE
segment and provided rod lift products, technologies, services and solutions to the oil and gas industry. The
sale resulted in a loss before income taxes of $216 million.
ACQUISITIONS
•
During 2022, we completed several acquisitions for total cash consideration of $767 million, net of cash
acquired of $50 million, subject to the finalization of post-closing working capital adjustments. The
transactions have been accounted for using the acquisition method of accounting and accordingly, assets
acquired and liabilities assumed were recorded at their fair values as of the acquisition date. As a result of
these acquisitions, we recorded $458 million of goodwill and $211 million of intangible assets. Pro forma
results of operations for these acquisitions have not been presented because the effects of these
acquisitions were not material to our consolidated financial statements.
NOTE 22. BUSINESS HELD FOR SALE
The Company classifies assets and liabilities as held for sale (“disposal group”) when management commits to
a plan to sell the disposal group and concludes that it meets the relevant criteria. Assets held for sale are measured
at the lower of their carrying value or fair value less costs to sell. Any loss resulting from the measurement is
recognized in the period the held for sale criteria are met. Conversely, gains are not recognized until the date of
sale.
In July 2022, we entered into an agreement with GE to sell Nexus Controls, a business in our IET segment,
specializing in scalable industrial controls systems, safety systems, hardware, and software cybersecurity solutions
and services. Based on preliminary estimates, the carrying value is expected to approximate the fair value of the
business, less costs to sell. We expect to complete the sale in mid-2023 subject to customary conditions, including
regulatory approvals.
The following table presents financial information related to the assets and liabilities of our Nexus Controls
business classified as held for sale and reported in “All other current assets” and “All other current liabilities” in our
consolidated statements of financial position as of December 31, 2022.
Assets and liabilities of business held for sale
Nexus Controls
Assets
Current receivables
Inventories
Property, plant and equipment
Goodwill
Other assets
Total assets of business held for sale
Liabilities
Accounts payable
All other current liabilities
Other liabilities
Total liabilities of business held for sale
Total net assets of business held for sale
$
$
59
36
2
230
10
337
30
56
7
93
244
Baker Hughes Company 2022 Form 10-K | 95
Baker Hughes Company
Notes to Consolidated Financial Statements
NOTE 23. SUPPLEMENTARY INFORMATION
ALL OTHER CURRENT LIABILITIES
All other current liabilities as of December 31, 2022 and 2021 include $837 million and $955 million,
respectively, of employee related liabilities.
ALLOWANCE FOR CREDIT LOSSES
The change in allowance for credit losses is as follows:
Balance at beginning of year
Provision
Write-offs
Prior year recoveries
Other
Balance at end of year
CASH FLOW DISCLOSURES
2022
2021
$
$
400 $
69
(34)
(44)
(50)
341 $
373
111
(23)
(39)
(22)
400
Supplemental cash flow disclosures are as follows for the years ended December 31:
Income taxes paid, net of refunds
Interest paid
2022
2021
2020
$
$
498 $
291 $
314 $
305 $
441
289
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated
the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule
15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2022, our
disclosure controls and procedures (as defined in Rule 15d-15(e) of the Exchange Act) were effective at a
reasonable assurance level.
There has been no change in our internal controls over financial reporting during the year ended December 31,
2022 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial
reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
Baker Hughes Company 2022 Form 10-K | 96
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding our Code of Conduct and the Code of Ethical Conduct Certificates for our principal
executive officer, principal financial officer and principal accounting officer are described in Item 1. Business of this
annual report on Form 10-K. Information concerning our directors is set forth in the sections entitled "Proposal
No. 1, Election of Directors - Board Nominees for Directors," and "Corporate Governance - Committees of the
Board" in our Definitive Proxy Statement for the 2023 Annual Meeting of Shareholders to be filed with the SEC
pursuant to the Exchange Act within 120 days of the end of our fiscal year on December 31, 2022 ("Proxy
Statement"), which sections are incorporated herein by reference. For information regarding our executive officers,
see "Item 1. Business - Executive Officers of Baker Hughes" in this annual report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Information for this item is set forth in the following section of our Proxy Statement, which section is
incorporated herein by reference: "Executive Compensation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information concerning security ownership of certain beneficial owners and our management is set forth in the
sections entitled "Stock Ownership of Certain Beneficial Owners" and “Stock Ownership of Section 16(a) Director
and Executive Officers” in our Proxy Statement, which sections are incorporated herein by reference.
We permit our employees, officers and directors to enter into written trading plans complying with Rule 10b5-1
under the Exchange Act. Rule 10b5-1 provides criteria under which such an individual may establish a prearranged
plan to buy or sell a specified number of shares of a company's stock over a set period of time. Persons using such
plan must act in good faith with respect to the contract with the broker executing the trades, trading instructions and
the trading plan as a whole, and such plan must be established at a time when the individual is not in possession of
material, nonpublic information and will be subject to a cooling off period to the initial trade thereunder. If an
individual establishes a plan satisfying the requirements of Rule 10b5-1, such individual's subsequent receipt of
material, nonpublic information will not prevent transactions under the plan from being executed. Certain of our
officers have advised us that they have and may enter into stock sales plans for the sale of shares of our Class A
common stock which are intended to comply with the requirements of Rule 10b5-1 of the Exchange Act. In addition,
the Company has and may in the future enter into repurchases of our Class A common stock under a plan that
complies with Rule 10b5-1 or Rule 10b-18 of the Exchange Act.
Equity Compensation Plan Information
The information in the following table is presented as of December 31, 2022 with respect to shares of our Class
A common stock that may be issued under our current and prior LTI Plans (in millions, except per share prices).
Equity Compensation Plan
Category
Shareholder-approved plans
Nonshareholder-approved plans
Subtotal (except for weighted average exercise price)
Employee Stock Purchase Plan
Total
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(excluding securities
reflected in the first
column)
2.9
—
2.9
0.5
3.4
$ 33.02
—
33.02
25.10
$ 31.90
27.8
—
27.8
10.5
38.3
Baker Hughes Company 2022 Form 10-K | 97
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information for this item is set forth in the sections entitled "Corporate Governance-Director Independence" and
"Certain Relationships and Related Party Transactions" in our Proxy Statement, which sections are incorporated
herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Our independent registered public accounting firm is KPMG LLP, Houston, Texas, Auditor Firm ID: 185.
Information concerning principal accountant fees and services is set forth in the section entitled "Fees Paid to
KPMG LLP" in our Proxy Statement, which section is incorporated herein by reference.
Baker Hughes Company 2022 Form 10-K | 98
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) List of Documents filed as part of this annual report.
(1) Financial Statements
All financial statements of the Company as set forth under Item 8 of this annual report on Form 10-K.
(2) Financial Statement Schedules
The schedules listed in Reg. 210.5-04 have been omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.
(3) Exhibits
Each exhibit identified below is filed as a part of this annual report. Exhibits designated with an "*" are filed as
an exhibit to this annual report on Form 10-K and exhibits designated with an "**" are furnished as an exhibit to this
annual report on Form 10-K. Exhibits designated with a "+" are identified as management contracts or
compensatory plans or arrangements. Exhibits previously filed are incorporated by reference.
Exhibit
Number
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10*
4.11
10.1
Exhibit Description
Second Amended and Restated Certificate of Incorporation of Baker Hughes Company dated October
17, 2019.
Fifth Amended and Restated Bylaws of Baker Hughes Company dated January 25, 2023.
Indenture, dated October 28, 2008, between Baker Hughes Incorporated (as predecessor to Baker
Hughes Holdings LLC) and The Bank of New York Mellon Trust Company, N.A., as trustee.
Second Supplemental Indenture, dated July 3, 2017, to the Indenture dated as of October 28, 2008,
among Baker Hughes Holdings LLC, Baker Hughes Co-Obligor, Inc. and The Bank of New York Mellon
Trust Company, N.A., as trustee.
Third Supplemental Indenture, dated December 11, 2017, to the Indenture dated as of October 28,
2008, among Baker Hughes Holdings LLC, Baker Hughes Co-Obligor, Inc. and The Bank of New York
Mellon Trust Company, N.A., as trustee.
Fourth Supplemental Indenture, dated November 7, 2019, to the Indenture dated as of October 28,
2008, among Baker Hughes Holdings LLC, Baker Hughes Co-Obligor, Inc. and the Bank of New York
Mellon Trust Company, N.A., as Trustee.
Fifth Supplemental Indenture, dated May 1, 2020 to the Indenture dated as of October 28, 2008,
among Baker Hughes Holdings LLC, Baker Hughes Co-Obligor, Inc. and The Bank of New York Mellon
Trust Company, N.A., as Trustee.
Sixth Supplemental Indenture, dated December 9, 2021 to the Indenture dated as of October 28, 2008,
among Baker Hughes Holdings LLC, Baker Hughes Co-Obligor, Inc. and The Bank of New York Mellon
Trust Company, N.A., as trustee.
Indenture, dated May 15, 1994, between Western Atlas Inc. and The Bank of New York Mellon, as
trustee.
First Supplemental Indenture dated July 3, 2017, to the Indenture dated as of May 15, 1994, among
Baker Hughes Holdings LLC, Baker Hughes Co-Obligor, Inc. and The Bank of New York Mellon Trust
Company, N.A., as trustee.
First Supplemental Indenture, dated as of July 3, 2017, to the Indenture dated as of May 15, 1991,
among Baker Hughes Holdings LLC, Baker Hughes Co-Obligor, Inc. and The Bank of New York Mellon
Trust Company, N.A., as trustee.
Description of Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934.
Form of Stock Certificate for Class A Common Stock of Baker Hughes Company under the Laws of the
State of Delaware.
Transaction Agreement, dated as of February 28, 2019, between Baker Hughes Holdings LLC, General
Electric Company and GE Aero Power LLC.
Baker Hughes Company 2022 Form 10-K | 99
10.2
10.3
10.4
10.5*
10.6
10.7
10.8+
10.9+
10.10+
10.11+
10.12+
STDA Side Agreement, dated as of July 31, 2019, between Baker Hughes Holdings LLC and General
Electric Company.
Aero-Derivatives Supply and Technology Development Agreement, dated as of November 13, 2018,
between Baker Hughes Holdings LLC and General Electric Company.
Umbrella Aero-Derivatives IP Agreement, dated as of November 13, 2018, between General Electric
Company and Baker Hughes Holdings LLC.
TMA Master Settlement Agreement as of February 13, 2023 among General Electric Company, Baker
Hughes Company, EHHC Newco, LLC and Baker Hughes Holdings LLC to settle disputes under the
Tax Matters Agreement.
Credit Agreement, dated as of December 10, 2019, among Baker Hughes Holdings LLC, the lenders
party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
Amended and Restated Limited Liability Company Agreement of Baker Hughes Holdings LLC dated as
of April 15, 2020.
Amended and Restated Baker Hughes Incorporated 2002 Employee Long-Term Incentive Plan.
Amended and Restated Baker Hughes Incorporated 2002 Director & Officer Long-Term Incentive Plan.
Form of Baker Hughes Incorporated Nonqualified Stock Option Award Agreement and Terms and
Conditions for officers dated 2011.
Form of Baker Hughes Incorporated Nonqualified Stock Option Award Agreement and Terms and
Conditions for officers dated January 2014.
Form of Baker Hughes Incorporated Nonqualified Stock Option Award Agreement and Terms and
Conditions for officers June 2014.
10.13+ Baker Hughes Company 2017 Long-Term Incentive Plan.
10.14+ Baker Hughes Company 2021 Long-Term Incentive Plan.
10.15+ Baker Hughes Company Executive Officer Short Term Incentive Compensation Plan as Amended and
Restated.
10.16+ Baker Hughes Company Non-Employee Director Deferral Plan as Amended and Restated.
10.17+ Amendment to the Baker Hughes Company Benefits Plans including the Baker Hughes Company 2017
Long-Term Incentive Plan.
10.18+ Baker Hughes Company Executive Severance Program.
10.19+
First Amendment to the Baker Hughes Company Executive Severance Program effective January 1,
2020.
10.20+ Baker Hughes Company Executive Change in Control Severance Plan.
10.21+ Baker Hughes Company Employee Stock Purchase Plan as Amended and Restated.
10.22+ Baker Hughes Company Supplementary Pension Plan as Amended and Restated Effective as of
December 31, 2018.
10.23+ Amendment to the Baker Hughes Holdings LLC Sponsored Benefit Plans including the Baker Hughes
Company Supplementary Pension Plan.
10.24+ Baker Hughes Company Supplemental Retirement Plan, as amended and restated effective as of
January 1, 2020.
10.25+ Baker Hughes Company Form of Indemnification Agreement dated July 2017.
10.26+ Baker Hughes Company Form of Director and Officer Indemnification Agreement dated March 18,
2020.
10.27+ Baker Hughes Company Form of Stock Option Award Agreement dated July 2017.
10.28+ Baker Hughes Company Form of Senior Executive Stock Option Award Agreement dated July 2017.
10.29+ Baker Hughes Company Form of Stock Option Award Agreement dated January 2018.
10.30+ Offer Letter between Baker Hughes Company and Lorenzo Simonelli, dated as of August 1, 2017.
10.31+ Restricted Stock Unit Award Agreement between Baker Hughes Company and Lorenzo Simonelli dated
as of June 1, 2018.
10.32+ Baker Hughes Company Form of Stock Option Award Agreement dated January 2019.
10.33+ Baker Hughes Company Form of Restricted Stock Unit Award Agreement (three year ratable vest)
dated January 2020.
10.34+ Baker Hughes Company Form of Restricted Stock Unit Award Agreement (three year cliff vest) dated
January 2020.
10.35+ Baker Hughes Company Form of ROIC Performance Share Unit Award Agreement dated January
2020.
Baker Hughes Company 2022 Form 10-K | 100
10.36+ Baker Hughes Company Form of TSR Performance Share Unit Award Agreement dated January 2020.
10.37+ Baker Hughes Company Form of Stock Option Award Agreement dated January 2020.
10.38+ Baker Hughes Company Form of Restricted Stock Unit Award Agreement (three year cliff vest) dated
January 2021.
10.39+ Baker Hughes Company Form of Restricted Stock Unit Award Agreement (three year ratable vest)
dated January 2021.
10.40+ Baker Hughes Company Form of Performance Share Unit Award Agreement dated January 2021.
10.41+
10.42+ Baker Hughes Company Form of Executive Officer Restricted Stock Unit Award Agreement (three year
Form of Transformation Incentive Award Agreement dated January 2021.
ratable vest) dated January 2022.
10.43+ Baker Hughes Company Form of Executive Officer Restricted Stock Unit Award Agreement (three year
cliff vest) dated January 2022.
10.44+ Baker Hughes Company Form of Executive Officer Performance Share Unit Award Agreement dated
January 2022.
10.45+ Baker Hughes Company Form of Director Stock Unit Award Agreement dated March 2022.
10.46+* Baker Hughes Company Form of Executive Officer Performance Share Unit Award Agreement dated
January 2023.
10.47+* Baker Hughes Company Form of Restricted Stock Unit Award Agreement (2-year cliff vest for new
hires) dated January 2023.
10.48+* Baker Hughes Company Form of Restricted Stock Unit Award Agreement (2-year ratable vest for new
hires) dated January 2023.
10.49+* Settlement Agreement between Baker Hughes Company and Neil Saunders dated December 20,
2022.
10.50+* Separation, Transition and Release Agreement between Baker Hughes Company and Brian Worrell
dated December 2, 2022.
Plea Agreement between Baker Hughes Services International, Inc. and the United States Department
of Justice filed on April 26, 2007, with the United States District Court of Texas, Houston Division.
Subsidiaries of the Company.
Consent of KPMG LLP.
Certification of Lorenzo Simonelli, President and Chief Executive Officer, furnished pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.
Certification of Nancy Buese, Chief Financial Officer, furnished pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended.
Certification of Lorenzo Simonelli, President and Chief Executive Officer, and Nancy Buese, Chief
Financial Officer, furnished pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as
amended.
Mine Safety Disclosures.
10.51
21.1*
23.1*
31.1**
31.2**
32**
95*
101.INS* XBRL Instance Document - the instance document does not appear in the Interactive Data File
because its XBRL tags are embedded within the Inline XBRL document.
101.SCH* XBRL Schema Document
101.CAL* XBRL Calculation Linkbase Document
101.LAB* XBRL Label Linkbase Document
101.PRE* XBRL Presentation Linkbase Document
101.DEF* XBRL Definition Linkbase Document
ITEM 16. FORM 10-K SUMMARY
None.
Baker Hughes Company 2022 Form 10-K | 101
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 14, 2023
BAKER HUGHES COMPANY
/s/ LORENZO SIMONELLI
Lorenzo Simonelli
Chairman, President and Chief
Executive Officer
KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Lorenzo Simonelli, Nancy Buese and Regina Jones, each of whom may act without joinder of the
other, as their true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for
such person and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to
this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed
below by the following persons on behalf of the registrant and in the capacities indicated on this 14th day of
February 2023.
Signature
Title
/s/ LORENZO SIMONELLI
(Lorenzo Simonelli)
Chairman, President and Chief Executive Officer
(principal executive officer)
/S/ NANCY BUESE
(Nancy Buese)
/S/ KURT CAMILLERI
(Kurt Camilleri)
Chief Financial Officer
(principal financial officer)
Senior Vice President, Controller and Chief Accounting Officer
(principal accounting officer)
Baker Hughes Company 2022 Form 10-K | 102
Signature
/s/ W. GEOFFREY BEATTIE
(W. Geoffrey Beattie)
/s/ GREGORY D. BRENNEMAN
(Gregory D. Brenneman)
/s/ CYNTHIA B. CARROLL
(Cynthia B. Carroll)
/s/ NELDA J. CONNORS
(Nelda J. Connors)
/s/ MICHAEL R. DUMAIS
(Michael R. Dumais)
/s/ LYNN L. ELSENHANS
(Lynn L. Elsenhans)
/s/ JOHN G. RICE
(John G. Rice)
/s/ MOHSEN M. SOHI
(Mohsen M. Sohi)
Title
Director
Director
Director
Director
Director
Director
Director
Director
Baker Hughes Company 2022 Form 10-K | 103
Reconciliation of GAAP to Non-GAAP Financial Measures*
Baker Hughes Company presents its financial results in accordance with U.S. GAAP. However, management
believes that additional non-GAAP measures are widely accepted financial indicators used by investors and
analysts to analyze and compare companies on the basis of operating performance and liquidity, and that these
measures may be used by investors to make informed investment decisions. The following tables reconcile our
GAAP financial information with non-GAAP financial information used in this annual report for the year ended
December 31, 2022.
The reconciliations of net loss attributable to Baker Hughes (GAAP) to EBITDA (non-GAAP) and Adjusted
EBITDA (non-GAAP) for the years ended December 31, 2022 and 2021 are as follows:
(in millions)
Net loss attributable to Baker Hughes (GAAP)
Net income (loss) attributable to noncontrolling interests
Provision for income taxes
Interest expense, net
Other non-operating loss, net
Operating income (GAAP)
Depreciation & amortization
EBITDA (non-GAAP)
Restructuring, impairment and other
Separation related
Inventory impairment
Total operating income adjustments
Adjusted EBITDA (non-GAAP)
Year Ended December 31
2021
2022
(601) $
23
600
252
911
1,185
1,061
2,246
682
23
31
735
2,981 $
(219)
(111)
758
299
583
1,310
1,105
2,415
209
60
—
268
2,681
$
$
The reconciliation of cash flow from operating activities (GAAP) to free cash flow (non-GAAP) for the year
ended December 31, 2022 is as follows:
(in millions)
Cash flow from operating activities (GAAP)
Less: Cash used for capital expenditures, net of proceeds from disposal of assets
Free cash flow (non-GAAP)
Year Ended
December 31, 2022
1,888
$
(772)
1,116
$
The reconciliation of Oilfield Services & Equipment ("OFSE") operating income (GAAP) to OFSE EBITDA (non-
GAAP) and OFSE EBITDA margin (non-GAAP) for the three months ended December 31, 2022 is as follows:
(in millions)
OFSE revenue
OFSE operating income (GAAP)
Add: OFSE depreciation & amortization
OFSE EBITDA (non-GAAP)
OFSE EBITDA margin (non-GAAP) (1)
Three Months
Ended
December 31, 2022
$
$
3,579
416
198
614
17.1 %
$
(1) OFSE EBITDA margin (non-GAAP) is defined as OFSE EBITDA (non-GAAP) divided by OFSE revenue.
*Certain columns may not sum up due to the use of rounded numbers.
Shareholder information
Transfer agent and registrar
Corporate communications office
Computershare Investor Services
Computershare
P.O. Box 43078
Providence, RI
02940-3078
Stock exchange listing
Ticker Symbol “BKR”
The Nasdaq Stock Market LLC
Investor relations office
Judson E. Bailey
Vice President, Investor Relations
Investor.relations@bakerhughes.com
+1 281-809-9088
Thomas Millas
Vice President, External Communications
media.relations@bakerhughes.com
Form 10-K
Additional copies of the Company’s
Annual Report (Form 10-K) are available
at no charge by writing to Investor Relations at our
corporate office or by visiting our investor website:
http://investors.bakerhughes.com/
Corporate office addresses
17021 Aldine Westfield Road
Houston, Texas 77073
Telephone: +1 713-439-8600
10th Floor, 245 Hammersmith Road
London W6 8PW
Telephone: +44 207 864 2400
Bakerhughes.com
2022ar