Baker Hughes Company
Energy Technology and Oilfield ServicesFounded 1987- Updated July 2025
Reviewed by Swet Parvadiya
Last reviewed: July 2025
CorpDigest
Baker Hughes Company
Company History
Founded 1987 in Houston, Texas, United States
Last reviewed: 2025-07-15 · By Swet Parvadiya
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Reuben Carlton 'Carl' Baker Sr. (July 18, 1872 – September 29, 1957) was an American oil industry pioneer who founded Baker Oil Tools. Born in Illinois, he arrived in Los Angeles in 1895 and worked his way from horse team driver to drilling contractor. In 1907, he patented the Baker Well Casing Shoe, a device that revolutionized cable tool drilling by ensuring uninterrupted oil flow through wells. He organized the Baker Casing Shoe Company in Coalinga, California, the same year, and expanded into manufacturing by 1918. His company became Baker Oil Tools in 1928 and Baker International in 1976. Baker obtained more than 150 U.S. patents in his lifetime, including the cement retainer (1912) and float shoe (1923), despite having only a third-grade education. He died at age 85, having built the foundation of what would become one of the world's largest energy technology companies.
Howard Robard Hughes Sr. (1869–1924) was an American inventor and businessman who founded Hughes Tool Company. Born in Missouri, he studied mining engineering and worked in the oilfields of Texas before partnering with Walter B. Sharp to develop the first commercially successful two-cone roller drill bit in 1909. The invention, patented the same year, enabled rotary drilling through hard rock formations and became the industry standard. After Sharp's death in 1912, Hughes acquired full control and renamed the company Hughes Tool Company in 1915. The company generated the fortune that funded his son Howard Hughes Jr.'s aviation, film, and real estate ventures. Hughes Sr. died in 1924, leaving a drill bit empire that would merge with Baker International 63 years later to form Baker Hughes.
On July 16, 1907, Reuben C. Baker was awarded U.S. Patent No. 860,115 for the Well Casing Shoe. On August 14, 1907, he organized the Baker Casing Shoe Company in Coalinga, California, with a machine shop and royalty-based licensing model generating $600-1,500 per month.
Howard R. Hughes Sr. and Walter B. Sharp founded Sharp-Hughes Tool Company in Houston, Texas, after successfully testing the first two-cone roller cutter drill bit. The invention, patented in 1909, enabled rotary drilling through hard rock and became the industry standard for three decades.
Following Walter B. Sharp's death in 1912, Howard R. Hughes Sr. acquired his partner's stake and renamed the company Hughes Tool Company in 1915. The company dominated the global drill bit market and generated the fortune that funded Howard Hughes Jr.'s aviation and film empire.
The Baker Casing Shoe Company was renamed Baker Oil Tools, Inc., reflecting its expansion beyond casing shoes into a full range of well completion and production equipment. By this time, the company had manufacturing operations in Los Angeles and Houston.
Baker Oil Tools completed its initial public offering, becoming a publicly traded company. The IPO provided capital for international expansion and product line diversification, establishing the foundation for the modern Baker Hughes global footprint.
Hughes Tool Company completed its initial public offering, 57 years after its founding. The company had grown to $1.1 billion in revenue by 1987, dominating the global drill bit market with proprietary two-cone and tricone roller bit technologies.
On April 5, 1987, Baker International and Hughes Tool Company merged to form Baker Hughes Incorporated, creating the world's third-largest oilfield services company with $3.5 billion in combined revenue and 25,000 employees. Max L. Lukens became chairman and CEO.
Baker Hughes acquired Eastman Christensen, a leader in directional drilling equipment and measurement-while-drilling (MWD) technology. The acquisition added critical horizontal and directional drilling capabilities that became essential for shale development.
On August 10, 1998, Baker Hughes completed the acquisition of Western Atlas for $5.5 billion in stock plus $700 million in assumed debt. The deal added seismic data acquisition, wireline logging, and reservoir characterization, creating the Baker Atlas division and making Baker Hughes the third-largest oilfield services company globally.
Baker Hughes and Schlumberger combined their geophysical operations to form WesternGeco, a seismic joint venture. Baker Hughes contributed Western Atlas's Western Geophysical division, while Schlumberger contributed Geco-Prakla. The venture was initially owned 70% by Schlumberger and 30% by Baker Hughes.
Schlumberger acquired Baker Hughes's 30% stake in WesternGeco for $2.4 billion, ending the seismic joint venture. The sale provided Baker Hughes with capital for debt reduction and share repurchases but eliminated its seismic data acquisition capabilities.
On November 17, 2014, Halliburton announced a $35 billion acquisition of Baker Hughes that would have created an OFSE giant rivaling SLB. The deal faced immediate antitrust scrutiny from the U.S. Department of Justice and international regulators.
On April 6, 2016, the U.S. Department of Justice blocked the Halliburton-Baker Hughes merger on antitrust grounds, arguing the combination would reduce competition in 23 product markets. Baker Hughes paid Halliburton a $3.5 billion breakup fee and operated as a weakened standalone company.
On July 3, 2017, Baker Hughes merged with GE Oil and Gas in a $7.4 billion deal, creating Baker Hughes, a GE company (BHGE). GE held 62.5% of shares. The merger added gas turbines, compressors, pumps, valves, and LNG systems to Baker Hughes's portfolio. Lorenzo Simonelli became CEO.
GE sold $2.7 billion in Baker Hughes shares in 2019, reducing its stake below 50%. The company rebranded as Baker Hughes Company (BKR) and adopted a new green logo signaling energy transition ambitions. GE's divestiture restored Baker Hughes's operational independence.
General Electric completed its full divestiture from Baker Hughes by selling its remaining 37% stake for approximately $5.5 billion. Baker Hughes became a fully independent public company for the first time since the 2017 GE merger, with no single shareholder holding more than 10%.
For fiscal year 2024, Baker Hughes generated $27.8 billion in revenue, $4.6 billion in adjusted EBITDA (16.5% margin), and $2.3 billion in free cash flow. The company booked $28.2 billion in orders, including $13.0 billion in IET orders, and held $33.1 billion in remaining performance obligations.
Baker Hughes acquired Western Atlas for $5.5 billion in stock to add seismic data acquisition, wireline logging, and reservoir characterization capabilities. Western Atlas was formed in 1987 from Western Geophysical (Litton Industries) and Dresser Atlas (Dresser Industries). The acquisition made Baker Hughes the third-largest oilfield services company globally.
Baker Hughes merged with GE Oil and Gas in a $7.4 billion deal to create a combined energy technology company. GE contributed gas turbines, compressors, pumps, valves, LNG systems, and industrial equipment. Baker Hughes contributed oilfield services expertise and market access.
Baker Hughes acquired Eastman Christensen, a leader in directional drilling equipment and measurement-while-drilling (MWD) technology, to add horizontal and directional drilling capabilities essential for emerging shale development.
Baker Hughes formed in 1987 through the $4.8 billion merger of Baker International (drilling fluids, completion tools) and Hughes Tool (drill bits, founded by Howard Hughes Sr. in 1909), combining two complementary oilfield service businesses to create scale to compete with Schlumberger and Halliburton. Hughes Tool had spent decades as the dominant drill bit supplier before Howard Hughes Jr. sold it to Baker International in 1987, and the combined company served oil and gas operators across exploration, drilling, completion, and production. The merger gave Baker Hughes breadth across the well lifecycle that neither company possessed independently, creating the third-largest oilfield services company.
GE's 2017 merger creating GE Baker Hughes was intended to combine GE's industrial turbines and digital capabilities with Baker Hughes' oilfield services in a $32 billion deal, but collapsed strategically as GE's financial difficulties forced it to divest assets rather than fund the integration. GE had invested Baker Hughes in the industrial IoT platform 'Predix' to create a digital oilfield services company, but GE's 2018-2019 crisis—when GE stock fell 70% and the company faced bankruptcy concerns—led to GE reducing its Baker Hughes stake from 62% to 10% by 2020. Baker Hughes, officially renamed in 2019, regained independence and refocused on oilfield services and industrial energy technology under CEO Lorenzo Simonelli.
Baker Hughes survived the 2015-2016 oil crash (crude fell from $110 to $28/barrel) by cutting 22,000 employees (34% of workforce), reducing capital expenditures by 50%, and preserving liquidity through disciplined cost management. The company's revenue fell from $24.6 billion in 2014 to $9.7 billion in 2016, but avoided the bankruptcy that smaller oilfield service companies faced. During the downturn Baker Hughes was also navigating a failed $34.6 billion merger with Halliburton that the DOJ blocked on antitrust grounds in 2016, receiving a $3.5 billion breakup fee that provided crucial capital during the industry's worst downturn in a generation.
Baker Hughes began articulating its 'energy technology' pivot around 2019-2021 under CEO Simonelli, positioning beyond pure oilfield services toward industrial energy technology including LNG equipment (through its Nuovo Pignone turbomachinery business), hydrogen, carbon capture, and energy efficiency solutions. The pivot responded to investor ESG concerns about pure oilfield service companies, and Baker Hughes' turbomachinery heritage from GE's industrial businesses provided credible industrial technology capabilities beyond oil and gas. By 2024, Baker Hughes organized into two segments—Oilfield Services & Equipment (OFSE) and Industrial & Energy Technology (IET)—with IET growing faster at 20%+ annually as LNG infrastructure investment accelerated globally.
Baker Hughes announced the all-stock-and-cash acquisition of BJ Services in August 2009 at an enterprise value of about $5.5 billion and closed it in April 2010, the largest deal in the company's history at that point. BJ Services, founded as Byron Jackson in 1872 and refloated as a public company in 1990 after a Halliburton divestiture, was the third-largest pressure pumping and cementing contractor in the world, with strong positions in US shale basins like the Barnett and the Haynesville and significant Gulf of Mexico and international cementing exposure. Before the deal, Baker Hughes was a powerhouse in drill bits, directional drilling, and downhole completion tools but had no meaningful hydraulic fracturing fleet, ceding the fast-growing North American unconventional services market to Halliburton and Schlumberger. After integration, Baker Hughes operated more than two million hydraulic horsepower of frac equipment and instantly became the number three pressure pumper in North America. The timing was difficult, however. Natural gas prices collapsed below $3 per MMBtu in the early 2010s, pressure pumping pricing fell, and BJ's North American gas exposure weighed on margins through 2012 and 2013. The strategic logic still mattered: combining pressure pumping with Baker's downhole tools created a more complete completions offering, and the deal positioned Baker Hughes as a credible third major when Halliburton attempted to acquire it for $34.6 billion in 2014.