Baker Hughes Announces Third Quarter Results

HOUSTON, Nov. 4 /PRNewswire/ -- Baker Hughes Incorporated (NYSE: BHI) today
announced that net income for the third quarter 2009 was $55 million or $0.18
per diluted share compared to $429 million or $1.39 per diluted share for the
third quarter 2008 and $87 million or $0.28 per diluted share for the second
quarter 2009. Net income for the third quarter 2009 includes expenses of $38
million before tax ($0.08 per share) associated with reorganization, severance
and acquisition costs, and an increase to our allowance for doubtful accounts.

As previously reported, net income for the second quarter 2009 included
expenses of $54 million before tax ($0.13 per share) comprised of $16 million
($0.04 per share) associated with employee severance and reorganization costs
and $38 million ($0.09 per share) associated with increasing our allowance for
doubtful accounts.

Revenue for the third quarter 2009 was $2.23 billion, down 26% compared to
$3.01 billion for the third quarter 2008 and down 4% compared to $2.34 billion
for the second quarter 2009.

Chad C. Deaton, Baker Hughes chairman, president and chief executive officer,
said, "Third quarter North America operating margins rebounded from the low
set in the second quarter of 2009. Aggressive cost cutting in the first half
of 2009 enabled us to absorb additional price decreases and improve
profitability on modest activity increases.

"International results were disappointing with revenue less than expected and
price discounting greater than expected. Our operating profit margin was also
impacted by the extra costs we are carrying to assure a smooth organizational
transition we announced in May 2009. Given the progress we are making on this
company transformation these additional costs should largely be behind us as
we enter 2010.

"Looking forward, gas-directed drilling in North America is gradually
increasing and we believe this trend will likely continue through 2010.
Internationally, we believe that customer spending reached its low point this
quarter and that forecasts for increasing economic growth, particularly in
China, India and the Middle East, combined with modest spare production
capacity are supporting higher oil prices and laying the foundation for
increased spending in 2010.

"We are continuing to make good progress on the pending BJ Services
transaction. Regulatory filings have been made in the US and in some
international jurisdictions, and our preliminary proxy statement has been
filed and is being reviewed by the SEC. We have received a 'second request'
from the Department of Justice which is limited in product and geographical
scope. As a result of the second request, we now project that the transaction
will close in the first quarter of 2010.

"With the pending addition of BJ Services, we expect to significantly advance
our competitiveness as we improve our customer intimacy, operational
effectiveness, and product portfolio."

During the third quarter 2009, debt decreased $23 million to $1.81 billion and
cash and short-term investments increased $125 million to $1.49 billion as
compared to the second quarter 2009. Capital expenditures were $222 million,
depreciation and amortization expense was $177 million and dividend payments
were $47 million in the third quarter 2009.

Financial Information
Consolidated Statements of Operations
Three Months Ended
UNAUDITED ---------------------------------
(In millions, except per share
amounts)
September 30, June 30,
----------------- ----------
2009 2008 2009
------ ------ ------

Revenues:
Sales $1,091 $1,446 $1,156
Services and rentals 1,141 1,564 1,180
-------------------- ----- ----- -----
Total revenues 2,232 3,010 2,336
-------------- ----- ----- -----

Costs and Expenses:
Cost of sales 937 1,032 926
Cost of services and rentals 824 996 871
Research and engineering 88 103 102
Marketing, general and administrative 272 278 284
------------------------------------- --- --- ---
Total costs and expenses 2,121 2,409 2,183
------------------------ ----- ----- -----

Operating income 111 601 153
Equity in income of affiliates - - -
Interest expense (29) (21) (34)
Interest and dividend income 1 10 3
---------------------------- --- --- ---
Income before income taxes 83 590 122
Income taxes (28) (161) (35)
------------ --- ---- ---
Net income $55 $429 $87
========== === ==== ===

Basic earnings per share $0.18 $1.40 $0.28

Diluted earnings per share $0.18 $1.39 $0.28

Weighted average shares outstanding,
basic 310 307 310
Weighted average shares outstanding,
diluted 311 308 310

Depreciation and amortization expense $177 $158 $182

Capital expenditures $222 $301 $291

Financial Information
Consolidated Statements of Operations

Nine Months Ended
UNAUDITED September 30,
---------------
(In millions, except per share amounts) 2009 2008
---- ----

Revenues:
Sales $3,558 $4,165
Services and rentals 3,678 4,513
-------------------- ----- -----
Total revenues 7,236 8,678
-------------- ----- -----

Costs and Expenses:
Cost of sales 2,890 2,952
Cost of services and rentals 2,628 2,842
Research and engineering 299 312
Marketing, general and administrative 837 798
Litigation settlement - 62
--------------------- -- --
Total costs and expenses 6,654 6,966
------------------------ ----- -----

Operating income 582 1,712
Equity in income of affiliates - 1
Gain on sale of product line - 28
Interest expense (98) (53)
Interest and dividend income 5 22
---------------------------- -- --
Income before income taxes 489 1,710
Income taxes (152) (507)
------------ ---- ----
Net income $337 $1,203
========== ==== ======

Basic earnings per share $1.09 $3.91

Diluted earnings per share $1.09 $3.89

Weighted average shares outstanding, basic 310 308
Weighted average shares outstanding,
diluted 310 309

Depreciation and amortization expense $532 $460

Capital expenditures $794 $840

Calculation of EBIT and EBITDA (non-GAAP measures)(1)

UNAUDITED Three Months Ended
-----------------------------
September 30, June 30,
------------------ --------
2009 2008 2009
------ ------ -------
$83 $590 $122
Income before income taxes
Interest expense 29 21 34
---------------- -- -- --
Earnings before interest expense and
taxes (EBIT) 112 611 156
Depreciation and amortization expense 177 158 182
------------------------------------- --- --- ---
Earnings before interest expense, taxes,
depreciation and amortization (EBITDA) $289 $769 $338
======================================= ==== ==== ====

(1) EBIT and EBITDA (as defined in the calculations above) are non-GAAP
measurements. Management uses EBIT and EBITDA because it believes that such
measurements are widely accepted financial indicators used by investors and
analysts to analyze and compare companies on the basis of operating
performance and that these measurements may be used by investors to make
informed investment decisions.

Consolidated Balance Sheets

(UNAUDITED September 30, December 31,
In millions) 2009 2008
=========== ==== ====
ASSETS
Current Assets:
Cash and cash equivalents $1,487 $1,955
Accounts receivable, net 2,220 2,759
Inventories, net 1,967 2,021
Deferred income taxes 244 231
Other current assets 174 179
-------------------- --- ---
Total current assets 6,092 7,145
-------------------- ----- -----

Property, plant and equipment, net 3,059 2,833
Goodwill 1,410 1,389
Intangible assets, net 199 198
Other assets 423 296
------------ --- ---
Total assets $11,183 $11,861
============ ======= =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $661 $888
Short-term borrowings and current
portion of long-term debt 23 558
Accrued employee compensation 459 530
Income taxes payable 58 272
Other accrued liabilities 252 263
------------------------- --- ---
Total current liabilities 1,453 2,511
------------------------- ----- -----

Long-term debt 1,783 1,775
Deferred income taxes and other tax
liabilities 322 384
Liabilities for pensions and other
postretirement benefits 376 317
Other liabilities 64 67

Stockholders' Equity:
Common stock 310 309
Capital in excess of par value 811 745
Retained earnings 6,474 6,276
Accumulated other comprehensive loss (410) (523)
------------------------------------ ---- ----
Total stockholders' equity 7,185 6,807
-------------------------- ----- -----
Total liabilities and stockholders'
equity $11,183 $11,861
=================================== ======= =======

Revenue, Profit Before Tax, and Profit Before Tax Operating Margin(1)

(in millions) Three Months Ended
-----------------------------------------
9/30/2009 9/30/2008 6/30/2009
------------- ------------ -----------
Segment Revenue
Drilling and Evaluation $1,051 $1,558 $1,116
Completion and Production 1,181 1,452 1,220
------------------------- ----- ----- -----
Oilfield Operations $2,232 $3,010 $2,336
=================== ====== ====== ======

Geographic Revenue
North America $817 $1,312 $794
Latin America 265 285 276
Europe Africa Russia Caspian 666 874 743
Middle East Asia Pacific 484 539 523
------------------------ --- --- ---
Oilfield Operations $2,232 $3,010 $2,336
=================== ====== ====== ======

Segment Profit Before Tax(1)
Drilling and Evaluation $41 $347 $73
Completion and Production 146 323 166
------------------------- --- --- ---
Oilfield Operations $187 $670 $239
=================== ==== ==== ====

Geographic Profit
Before Tax(1)
North America $39 $316 $3
Latin America 10 51 34
Europe Africa Russia Caspian 87 202 130
Middle East Asia Pacific 51 101 72
------------------------ -- --- --
Oilfield Operations 187 670 239
------------------- --- --- ---

Corporate and Other
Profit Before Tax(1)
Interest expense (29) (21) (34)
Interest and dividend
income 1 10 3
Corporate and other (76) (69) (86)
------------------- --- --- ---
Corporate, net interest and
other (104) (80) (117)
--------------------------- ---- --- ----
Total Profit Before Tax $83 $590 $122
======================= === ==== ====

Profit Before Tax
Operating Margin(1)
Drilling and Evaluation 4% 22% 7%
Completion and Production 12% 22% 14%
Oilfield Operations 8% 22% 10%

Profit Before Tax
Operating Margin(1)
North America 5% 24% 0%
Latin America 4% 18% 12%
Europe Africa Russia Caspian 13% 23% 17%
Middle East Asia Pacific 11% 19% 14%
Oilfield Operations 8% 22% 10%

(1) Profit before tax operating margin is a non-GAAP measure defined as profit
before tax ("income before income taxes") divided by revenue. Management uses
the profit before tax operating margin because it believes it is a widely
accepted financial indicator used by investors and analysts to analyze and
compare companies on the basis of operating performance and that this
measurement may be used by investors to make informed investment decisions.

Expenses for Reorganization, Severance and Acquisition Costs, and Increases
to Allowance for Doubtful Accounts Included in the Following(1)

This table reconciles "Revenue, Profit Before Tax, and Profit Before Tax
Operating Margin" (table above) with "Revenue, Profit Before Tax, and Profit
Before Tax Operating Margin Excluding Reorganization, Severance and
Acquisition Costs, and Increases to Allowance for Doubtful Accounts" (table
below)

(In millions) Three Months Ended
-----------------------------------------
9/30/2009 9/30/2008 6/30/2009
============== ============= ============

Segment Expense
Drilling and Evaluation $12 - $26
Completion and Production 17 - 25
------------------------- --- --- ---
Oilfield Operations $29 - $51
=================== === === ===
$
Geographic Expense
North America $15 - $13
Latin America 3 - 23
Europe Africa Russia Caspian 3 - 10
Middle East Asia Pacific 8 - 5
------------------------ --- --- ---
Oilfield Operations $29 - $51
------------------- --- --- ---

Corporate Expense
Corporate and other 9 - 3
------------------- --- --- ---
Total $38 - $54
===== === === ===

(1) Charges associated with reorganization, severance and acquisition
(associated with the pending merger with BJ Services) costs were approximately
$33 million in the third quarter 2009 and approximately $16 million in the
second quarter 2009. Charges associated with allowances for doubtful accounts
were approximately $ 5 million in the third quarter 2009 and approximately $38
million in the second quarter 2009.

Revenue, Profit Before Tax, and Profit Before Tax Operating Margin(1)
Excluding Reorganization, Severance and Acquisition Costs, and Increases to
Allowance for Doubtful Accounts

The following table contains non-GAAP measures of segment profit before tax,
geographic profit before tax, corporate and other profit before tax, and
operating margins excluding expenses for, reorganization, severance and
acquisition costs, and increases to allowance for doubtful accounts (see table
above). Management uses this measure to isolate the results of certain
operations and believes that this information may be useful to investors.

Three Months Ended
-----------------------------------------
9/30/2009 9/30/2008 6/30/2009
------------- ------------- -----------
Segment Revenue
Drilling and Evaluation $1,051 $1,558 $1,116
Completion and Production 1,181 1,452 1,220
------------------------- ----- ----- -----
Oilfield Operations $2,232 $3,010 $2,336
=================== ====== ====== ======

Geographic Revenue
North America $817 $1,312 $794
Latin America 265 285 276
Europe Africa Russia Caspian 666 874 743
Middle East Asia Pacific 484 539 523
------------------------ --- --- ---
Oilfield Operations $2,232 $3,010 $2,336
=================== ====== ====== ======

Segment Profit Before Tax
Drilling and Evaluation $53 $347 $99
Completion and Production 163 323 191
------------------------- --- --- ---
Oilfield Operations $216 $670 $290
=================== ==== ==== ====

Geographic Profit Before Tax
North America $54 $316 $16
Latin America 13 51 57
Europe Africa Russia Caspian 90 202 140
Middle East Asia Pacific 59 101 77
------------------------ -- --- --
Oilfield Operations 216 670 290
------------------- --- --- ---

Corporate and Other Profit
Before Tax
Interest expense (29) (21) (34)
Interest and dividend income 1 10 3
Corporate and other (67) (69) (83)
------------------- --- --- ---
Corporate, net interest and
other (95) (80) (114)
--------------------------- --- --- ----
Total Profit Before Tax $121 $590 $176
======================= ==== ==== ====

Profit Before Tax
Operating Margin(1)
Drilling and Evaluation 5% 22% 9%
Completion and Production 14% 22% 16%
Oilfield Operations 10% 22% 12%

Profit Before Tax
Operating Margin(1)
North America 7% 24% 2%
Latin America 5% 18% 21%
Europe Africa Russia Caspian 14% 23% 19%
Middle East Asia Pacific 12% 19% 15%
Oilfield Operations 10% 22% 12%

(1) Profit before tax operating margin is a non-GAAP measure defined as profit
before tax ("income before income taxes") divided by revenue. Management uses
the profit before tax operating margin because it believes it is a widely
accepted financial indicator used by investors and analysts to analyze and
compare companies on the basis of operating performance and that this
measurement may be used by investors to make informed investment decisions.

Comparison of Revenue to Prior Periods

Percent Increase (Decrease) for the
Three Months Ended September 30, 2009 Compared to the
-----------------------------------------------------
Three Months Ended Three Months Ended
September 30, 2008 June 30, 2009
------------------ ------------------
Segment
Drilling and Evaluation (33%) (6%)
Completion and Production (19%) (3%)
Oilfield Operations (26%) (4%)

Geographic
North America (38%) 3%
Latin America (7%) (4%)
Europe Africa Russia Caspian (24%) (10%)
Middle East Asia Pacific (10%) (7%)
Oilfield Operations (26%) (4%)

Operational Highlights

North America

Revenue in North America reflected changes in the North America rig count
which was down 52% year-over-year. The sequential quarterly improvement was
primarily driven by a 13% increase in the North America rig count, where a
strong seasonal rebound in Canada was partially offset by a 32% decrease in
offshore drilling as offshore activity slowed during the Gulf of Mexico
hurricane season.

The sequential improvement in profit before tax and profit before tax margins
demonstrated the advantages of our early and aggressive cost cutting in the
first half of 2009 which overcame incremental price discounting in the third
quarter 2009.

During the quarter, and in collaboration with a major U.S. independent
operator, our US Land geomarket team successfully installed the first 24-stage
FracPoint(TM) EX open hole isolation completion system in the Williston Basin.

In addition, we launched our IntelliFrac(TM) service, an integration of our
advanced micro-seismic services with state-of-the-art fracturing and
production enhancement services from BJ Services. This combined offering of
services enables operators to monitor fracture dimensions during stimulation
treatments and allows real-time control of fracture operations.

Latin America

Revenue declined year-over-year as increased revenue from the Mexico / Central
America geomarket was offset by reduced revenue from the Venezuela and
Argentina / Bolivia / Chile geomarkets. Revenue declined sequentially
primarily due to lower activity in the Venezuela geomarket. Operating profit
margin in the third quarter was adversely impacted by incremental costs in the
Mexico / Central America and Brazil geomarkets associated with start-up
activity, and higher labor costs in the Argentina / Bolivia / Chile geomarket.

During the quarter we were awarded a contract for intelligent completions for
the pre-salt Tupi field in Brazil valued in excess of $50 million.

In the Mexico/Central America geomarket, we operated on a record six rigs in
the Alma marine integrated services project for PEMEX, and we completed the
drilling phase of the first Alma well and started completion operations. In
addition, we introduced FracPoint(TM) into the Mexico/Central America
geomarket, and commenced operations on three ATG integrated contracts awarded
by PEMEX to local integrated operations suppliers last quarter. Under these
three contracts, Baker Hughes is providing individual product line well
construction technologies and services as a subcontractor.

Also during the third quarter, our newly-deployed BEACON center for Mexico
became fully operational, providing permanent real-time monitoring visibility
of ongoing operations allowing Baker Hughes experts from around the world to
provide support on operational and technical challenges as they arise.

Europe Africa Russia Caspian

Revenue declined year-over-year in all geomarkets with the exception of
Angola, with the largest declines in the Russia, UK and Norway geomarkets.
Sequentially, revenues declined as the increases in the Norway, Sub Sahara
Africa, and Caspian geomarkets were more than offset by declines in the UK,
Russia, Continental Europe, Angola and Libya geomarkets.

Baker Hughes drilled and completed the first well using our 9-5/8" steerable
liner drilling system for a client in Norway. The system features INTEQ
directional drilling systems, Hughes Christensen drill bits and Baker Oil
Tools completion systems.

In Azerbaijan we were awarded a $300 million contract in the third quarter
2009 for directional drilling, formation evaluation and completion systems.
Work is expected to commence in January 2010.

Middle East Asia Pacific

The year-over-year revenue decline in the region was in line with the decline
in the rig count, with higher revenue from the Australasia and India/Southwest
Asia geomarkets being offset by lower revenue from all other Middle East Asia
Pacific geomarkets. Compared to the second quarter 2009, revenue increases in
the India / Southwest Asia, Indonesia, and Australasia geomarkets were more
than offset by reduced revenue in the North Asia, Egypt, Gulf and Southeast
Asia geomarkets.

During the quarter we were awarded drilling, evaluation and completion
contracts for a twelve well deepwater exploration program for a consortium of
six major integrated oil companies operating in Indonesia.

In the Gulf geomarket, we achieved a new milestone in reservoir
characterization, performing one of the largest ever onshore 3D Vertical
Seismic Profiling jobs for a major National Oil Company.

Conference Call

The company has scheduled a conference call to discuss the results of today's
earnings announcement. The call will begin at 8:30 a.m. Eastern time, 7:30
a.m. Central time, on Wednesday, November 4, 2009. To access the call, which
is open to the public, please contact the conference call operator at (800)
374-2469, or (706) 634-7270 for international callers, 20 minutes prior to the
scheduled start time, and ask for the "Baker Hughes Conference Call." A
replay will be available through Wednesday, November 18, 2009. The number for
the replay is (800) 642-1687, or (706) 645-9291 for international callers, and
the access code is 33298674. The call and replay will also be web cast on
www.bakerhughes.com/investor.

Forward-Looking Statements

This news release (and oral statements made regarding the subjects of this
release, including on the conference call announced herein) contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, (each a "forward-looking statement"). The words
"anticipate," "believe," "ensure," "expect," "if," "intend," "estimate,"
"project," "forecasts," "predict," "outlook," "aim," "will," "could,"
"should," "would," "may," "probable," "likely," and similar expressions, and
the negative thereof, are intended to identify forward-looking statements.
There are many risks and uncertainties that could cause actual results to
differ materially from our forward-looking statements. These forward-looking
statements are also affected by the risk factors described in the company's
Annual Report on Form 10-K for the year ended December 31, 2008; and those set
forth from time to time in our other filings with the Securities and Exchange
Commission ("SEC"). The documents are available through the company's website
at http://www.bakerhughes.com/investor or through the SEC's Electronic Data
Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. We
undertake no obligation to publicly update or revise any forward-looking
statement.

Our expectations regarding our business outlook and business plans; the
business plans of our customers; oil and natural gas market conditions; cost
and availability of resources; economic, legal and regulatory conditions and
other matters are only our forecasts regarding these matters.

These forecasts may be substantially different from actual results, which are
affected by many risks including the following risk factors and the timing of
any of those risk factors:

Baker Hughes - BJ Services pending merger - the ability to obtain regulatory
approvals for the transaction and the approval of the merger agreement by the
stockholders of both parties; the risk that the cost savings and any other
synergies from the transaction may not be realized or take longer to realize
than expected; disruption from the transaction making it more difficult to
maintain relationships with customers, employees or suppliers; the ability to
successfully integrate the businesses; unexpected costs or unexpected
liabilities that may arise from the transaction, whether or not consummated;
the inability to retain key personnel; continuation or deterioration of
current market conditions; the outcome of pending litigation; future
regulatory or legislative actions that could adversely affect the companies
and the business plans of the customers of the respective parties.

Economic conditions - the impact of deteriorating worldwide economic
conditions; the effect that declines in credit availability may have on
worldwide economic growth and demand for hydrocarbons; the ability of our
customers to finance their exploration and development plans; foreign currency
exchange fluctuations and changes in the capital markets in locations where we
operate; the condition of financial institutions and the debt, capital and
equity markets in general, any impact on our ability to borrow to fund
short-term cash requirements and retire long-term debt upon maturity as well
as any impact on our customers' spending and ability to pay amounts owed to
us; our ability to estimate the size of and changes in the worldwide oil and
natural gas industry.

Oil and gas market conditions - the level of petroleum industry exploration,
development and production expenditures; the price of, volatility in pricing
of, and the demand for, crude oil and natural gas; drilling activity; excess
productive capacity; crude and product inventories; LNG imports; seasonal and
other adverse weather conditions that affect the demand for energy; severe
weather conditions, such as hurricanes, that affect exploration and production
activities; Organization of Petroleum Exporting Countries ("OPEC") policy and
the adherence by OPEC nations to their OPEC production quotas.

Terrorism and geopolitical risks - war, military action, terrorist activities
or extended period of international conflict, particularly involving any major
petroleum-producing or consuming regions; labor disruptions, civil unrest or
security conditions where we operate; expropriation of assets by governmental
action.

Price, market share, contract terms, and customer payments - our ability to
obtain market prices for our products and services; the effect of the level
and sources of our profitability on our tax rate; the ability of our
competitors to capture market share; our ability to retain or increase our
market share; changes in our strategic direction; the integration of
newly-acquired businesses; the effect of industry capacity relative to demand
for the markets in which we participate; our ability to negotiate acceptable
terms and conditions with our customers, especially national oil companies,
successfully execute these contracts, and receive payment in accordance with
the terms of our contracts with our customers; our ability to manage warranty
claims and improve performance and quality; our ability to effectively manage
our commercial agents.

Costs and availability of resources - our ability to manage the costs and
availability of sufficient raw materials and components (especially steel
alloys, chromium, copper, carbide, lead, nickel, titanium, beryllium, barite,
synthetic and natural diamonds, chemicals, and electronic components); our
ability to manage energy-related costs; our ability to manage
compliancerelated costs; our ability to recruit, train and retain the skilled
and diverse workforce necessary to meet our business needs and manage the
associated costs; manufacturing capacity and subcontracting capacity at
forecasted costs to meet our revenue goals; the availability of essential
electronic components used in our products; the effect of competition,
particularly our ability to introduce new technology on a forecasted schedule
and at forecasted costs; potential impairment of long-lived assets; the
accuracy of our estimates regarding our capital spending requirements;
unanticipated changes in the levels of our capital expenditures; the need to
replace any unanticipated losses in capital assets; the development of
technology by us or our competitors that lowers overall finding and
development costs; labor-related actions, including strikes, slowdowns and
facility occupations.

Litigation and changes in laws or regulatory conditions - the potential for
unexpected litigation or proceedings; the legislative, regulatory and business
environment in the US and other countries in which we operate; costs and
changes in processes and operations related to or resulting from the
activities of the compliance monitor appointed to assess our Foreign Corrupt
Practices Act policies and procedures in connection with previously reported
settlements with the SEC and Department of Justice ("DOJ") as well as
compliance with the terms of the settlements as well as any future agreements
with the SEC, DOJ or other authority; outcome of government and legal
proceedings as well as costs arising from compliance and ongoing or additional
investigations in any of the countries where the company does business; new
laws, regulations and policies that could have a significant impact on the
future operations and conduct of all businesses; changes in export control
laws or exchange control laws; restrictions on doing business in countries
subject to sanctions; customs clearance procedures; changes in laws in
countries identified by management for immediate focus; changes in accounting
standards; changes in tax laws or tax rates in the jurisdictions in which we
operate; resolution of tax assessments or audits by various tax authorities;
and the ability to fully utilize our tax loss carry forwards and tax credits.

Environmental matters - unexpected, adverse outcomes or material increases in
liability with respect to environmental remediation sites where we have been
named as a potentially responsible party; the discovery of new environmental
remediation sites; changes in environmental regulations; the discharge of
hazardous materials or hydrocarbons into the environment.

Additional Information and Where to Find It
On October 14, 2009, Baker Hughes filed with the SEC a Registration Statement
on Form S-4, which includes a joint proxy statement of Baker Hughes and BJ
Services that also constitutes a prospectus of Baker Hughes regarding the
proposed transaction. INVESTORS AND SECURITY HOLDERS OF BAKER HUGHES AND BJ
SERVICES ARE URGED TO CAREFULLY READ THE REGISTRATION STATEMENT FILED WITH THE
SEC AND THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER
MATERIALS FILED OR TO BE FILED WITH THE SEC REGARDING THE PROPOSED TRANSACTION
WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN, OR WILL CONTAIN, IMPORTANT
INFORMATION REGARDING BAKER HUGHES, BJ SERVICES AND THE PROPOSED TRANSACTION.
A definitive joint proxy statement/prospectus will be sent to security holders
of Baker Hughes and BJ Services seeking their approval of the proposed
transaction. Investors and security holders may obtain a free copy of the
proxy statement/prospectus and other documents filed by Baker Hughes and BJ
Services with the SEC at the SEC's web site at www.sec.gov.

The joint proxy statement/prospectus and such other documents (relating to
Baker Hughes) may also be obtained from Baker Hughes for free from Baker
Hughes' web site at www.bakerhughes.com/investor or by directing a request to:
Baker Hughes Incorporated, 2929 Allen Parkway, Suite 2100, Houston, TX 77019,
Attention: Corporate Secretary, or by phone at (713) 439-8600.

The joint proxy statement/prospectus and such other documents (relating to BJ
Services) may also be obtained from BJ Services for free from BJ Services' web
site at www.bjservices.com or by directing a request to: BJ Services Company,
P.O. Box 4442, Houston, Texas 77210-4442, Attention: Investor Relations, or by
phone at (713) 462-4239.

Participants in the Solicitation

Baker Hughes, its directors, executive officers and certain members of
management and employees may be considered "participants in the solicitation"
of proxies from Baker Hughes' stockholders in connection with the proposed
transaction. Information regarding such persons and a description of their
interests in the proposed transaction are contained in the preliminary joint
proxy statement/prospectus filed.

BJ Services, its directors, executive officers and certain members of
management and employees may be considered "participants in the solicitation"
of proxies from BJ Services' stockholders in connection with the proposed
transaction. Information regarding such persons and a description of their
interests in the proposed transaction are contained in the preliminary joint
proxy statement/prospectus filed.

Baker Hughes provides reservoir consulting, drilling, formation evaluation,
completion and production products and services to the worldwide oil and gas
industry.

Contact:
Gary R. Flaharty, +1.713.439.8039, gflaharty @ bakerhughes.com
H. Gene Shiels, +1.713.439.8822, gene.shiels @ bakerhughes.com

SOURCE Baker Hughes Incorporated

Gary R. Flaharty, +1-713-439-8039, gflaharty @ bakerhughes.com, or H. Gene
Shiels, +1-713-439-8822, gene.shiels @ bakerhughes.com, both of Baker Hughes
Incorporated