Baker Hughes

Snapshot

Baker Hughes is the company that almost nobody describes correctly. Say the name and most listeners picture drill bits, mud loggers, and West Texas yards. That version is still there, generating about $14B a year, but it is now less than half the business. The other half is a Florence, Italy turbine franchise that traces to 1842, the world's longest-running LNG compression install base, and, as of July 2026, Chart Industries' cryogenic and heat-exchange stack. The combined company holds a $46.4B backlog, books orders at a 1.3 book-to-bill, and has repositioned itself as the balance-of-plant supplier for the three energy themes investors actually care about in 2026: LNG export capacity, behind-the-meter power for AI data centers, and the slow build-out of hydrogen and carbon capture.

The market still prices BKR as an oilfield services name. At roughly $46B of market capitalization in early November 2026, it trades below its larger peer SLB and inside a range it has occupied for most of the post-GE era. The underlying asset is no longer the one on the ticker tape.

How it actually works

Baker Hughes reports in three segments after the Chart close in July 2026.

Oilfield Services & Equipment (OFSE) is the legacy drill-bit, wireline, pressure pumping, completions, and subsea business. Revenue in Q3 2026 was $3.66B at an 18.1% segment EBITDA margin. OFSE sells equipment and services into the drilling cycle: Hughes Christensen-branded drill bits (the direct descendant of Howard Hughes Sr.'s 1908 roller-cone patent), wireline logging tools, pressure control, artificial lift, chemicals, and subsea trees. Revenue recognition is a mix of equipment sales, day-rate services, and long-tail aftermarket. The cycle is governed by global E&P capex, which has been flat-to-down in North America and strong in the Middle East in 2026.

Industrial & Energy Technology (IET) is the former GE Oil & Gas business, anchored by Nuovo Pignone in Florence. Q3 2026 revenue of $3.48B at a 19.7% segment EBITDA margin. IET sells four kinds of boxes: aeroderivative and heavy-duty gas turbines (LM2500, LM6000, NovaLT family, Frame 5, Frame 9); centrifugal and reciprocating compressors; pumps and valves; and increasingly the digital and controls layer that wraps them. The business model inside IET is the GE Aviation playbook applied to oil and gas: sell the turbine at modest margin, lock in 20-30 years of parts, overhauls, and contractual service agreements at 25-35% margins. Nuovo Pignone shipped its first centrifugal compressor to Qatargas in the 1990s. Twenty-five years later, Baker Hughes is still servicing that fleet.

Chart Industries, the newest segment, is roughly a $4B revenue business in cryogenic heat exchangers, brazed aluminum coldboxes, air coolers, specialty tanks, and lifecycle services. Chart previously bought Howden in 2023, so the segment also carries the Howden fan and compressor franchise. Inside the LNG value chain, Chart's brazed aluminum heat exchanger is the heart of a mid-scale liquefaction train, and its cryogenic storage dominates small-scale LNG and industrial gases. Q3 2026 Chart revenue was $888M with EBITDA margin of 17.6%.

Backlog, called Remaining Performance Obligation in the 10-K, is the metric that matters most. At Q3 2026 the total RPO was $46.4B, up $6.4B sequentially. IET alone sits at $39.4B, a record, with Chart adding another $3.6B. OFSE RPO is only $3.4B because its services business books and burns within the quarter. Management raised its "Horizon 2" cumulative IET orders outlook for 2026-2028 to "$50B plus" on the Q3 call.

Pricing and take rate

Baker Hughes does not have a take rate in any SaaS sense. It has three different margin structures bolted together.

In OFSE, pricing is a function of utilization and the North American rig count. When U.S. land is overheated, pressure pumping and wireline leverage spike; in 2025-2026 North America has been sluggish and Middle East activity has been the offset. OFSE margins in the high teens to low twenties are the current ceiling without a drilling boom.

In IET, every heavy-duty gas turbine sold is a 20-year annuity. New-unit margins are typically mid-to-high single digits on a GAAP basis; the services tail runs 25-35% at the segment EBITDA line. That is why the $39B IET backlog is more valuable than it looks: roughly a third of it is contractual services that convert at higher margins than one-time equipment.

In Chart, the brazed heat-exchanger business runs at mid-teens margins today, with management targeting a 300-400 basis point lift as Baker Hughes supply chain and service integration flows through. The $325M of planned cost synergies, to be achieved over three years, is where the deal math lives.

Traction

Full year 2025 produced $27.7B of revenue, $4.83B of adjusted EBITDA, $2.73B of free cash flow, and $29.6B of orders - the first year orders cleared revenue since the GE separation. Within the mix, OFSE revenue was down 8% to $14.3B, IET was up 10% to $13.4B, and IET EBITDA jumped 21% as Nuovo Pignone's margin program matured. Year-end 2025 RPO was $35.9B.

2026 has accelerated the shift. Q3 revenue of $8.0B was up 14% year-over-year, aided by the Chart acquisition. Orders of $10.8B were up 31%. IET orders alone were $5.9B, up 42%. The buyers behind those orders tell the whole story: Venture Global, QatarEnergy, and Sempra on the LNG side; a 1.8 GW "behind-the-meter" NovaLT turbine program for U.S. data center customers including a 270 MW Frontier Infrastructure deal; a growing book of CCUS compression and hydrogen plant equipment.

The near-term knock on the quarter was cash flow and leverage. Q3 free cash flow was healthy at $769M, but net income dropped to $411M on Chart integration charges and the share count expanded to fund the deal. Baker Hughes will spend 2027 digesting what it bought.

Competitors

In OFSE, Baker Hughes is the number three player behind SLB (roughly $36B of 2025 revenue) and Halliburton (~$23B). SLB has historically outperformed BKR in international markets and digital. Halliburton dominates North American completions. Baker Hughes' OFSE offering is broad but has long been seen as the less dominant of the big three in services, and the Simonelli regime has been explicit that OFSE is a cash generator, not a growth engine.

In IET and Chart, the competitor set is entirely different. Siemens Energy and Mitsubishi Heavy are the primary rivals for heavy-duty turbines and large LNG trains, with GE Vernova a legacy competitor now carved out from the same GE parent. Solar Turbines, a Caterpillar division, competes in the small-to-mid turbine segment, especially gas gathering and midstream. Air Products, Linde, and Honeywell UOP license the LNG process technology that sits around Baker Hughes' and Chart's equipment. On carbon capture, ExxonMobil's Low Carbon Solutions group is both a customer and a frenemy.

The structural point is that Baker Hughes is the only company that sits in all three places: oilfield services, large rotating equipment, and cryogenic process. SLB cannot sell a turbine. Siemens Energy cannot pump a well. Chart standalone could not price a 20-year service agreement off a global installed base.

History

The Baker Hughes brand is a 1987 fusion of two very old companies. Reuben C. Baker filed his first patent on a casing shoe in 1894 while working in the Santa Clara Valley oil patch; Baker Casing Shoe Company, later Baker Oil Tools, grew out of that filing. Howard R. Hughes Sr. and Walter Benona Sharp patented the two-cone roller rock bit in 1908 and formed Sharp-Hughes Tool, which became Hughes Tool after Sharp's death and was the engine behind the Hughes family fortune. The two companies ran as parallel oilfield royalty for eight decades before merging in a $728M stock deal in 1987 to form Baker Hughes Incorporated.

The pivot that shaped the company it is today started in 2016, when GE and Baker Hughes announced a complex reverse merger that combined GE Oil & Gas - the Florence-based Nuovo Pignone turbine and compressor business GE had acquired in 1994 - with Baker Hughes. The transaction closed in July 2017. Lorenzo Simonelli, who had run GE Oil & Gas and before that GE Transportation, took the CEO seat. Larry Culp, now GE Vernova's chair, replaced John Flannery at GE in 2018 and promptly began reversing GE's conglomerate posture. GE's roughly 62.5% stake was sold in stages between 2019 and 2023, and Baker Hughes rebranded away from "Baker Hughes, a GE Company" in October 2019.

Simonelli's bet, repeated since 2019, was that natural gas and derivative energy-transition technologies would outpace oilfield services. He organized the company into two reporting segments in 2022, retired the four-segment structure, launched a hydrogen and CCUS "new energy" vertical, and spent the next four years tucking in startups in emissions monitoring, geothermal, and small modular turbines. The Chart Industries deal, announced in July 2025 at $13.6B of enterprise value and closed July 16, 2026, is the capstone of that strategy.

Reviews

What analysts and customers like: IET margins have grown roughly 400 basis points under current management; the Nuovo Pignone turbine business is genuinely best-in-class in LNG mechanical drive; the data-center turbine pipeline, enabled by NovaLT and Frame 5 units, is a real option on sovereign AI infrastructure; Chart adds a true cryogenic process capability the company lacked; and the company has returned a steady 60%+ of free cash flow to shareholders through dividends and buybacks.

What the skeptics raise: OFSE is still a drag in North America and lags SLB in international markets; the Chart integration adds leverage (net debt pushed past $10B post-close) and execution risk; and the equity has not re-rated the way the backlog suggests it should, because the market continues to lump BKR with cyclical service peers. A recurring complaint is that management communication, while improved, still treats the LNG and data center opportunity as part of a diversified bundle rather than carving it out financially.

Market size

The three TAMs that matter: the global oilfield services market is estimated at roughly $280B in 2026 and growing at a mid-single-digit rate; the LNG equipment and midstream compression market, in which Baker Hughes is a top-two supplier, runs about $40-60B annually and is in the middle of a structural build cycle on U.S. Gulf Coast and Qatar expansions; and the behind-the-meter power and small-turbine data-center market, a 2024 concept that is now a 2026 reality, is forecast to cross $25B annually by 2030 on current hyperscaler announcements. Hydrogen and CCUS equipment are still sub-$10B markets but are the fastest-growing slice of IET orders.

Baker Hughes' bet is that it can keep the OFSE share it has, compound IET at 10-15% on gas and power, and let Chart carry double-digit growth on the energy transition tail. If the backlog converts at historical margins, the company will generate $5B+ of free cash flow in 2028 against a current market cap of $46B. That is the pitch management is now making, and increasingly the one the energy buy-side is being forced to take seriously.