Valuation-Baker Hughes Inc

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1. Executive Summary Crude Oil Price, as an important element of resource prices, is nowadays becoming focus of world economy. Crude oil price cycles drive fluctuations in demand of oil and gas equipment and services industry. Main players in this sector in US include Baker Hughes, Diamond Offshore Drilling, Halliburton, National Oilwell Varco, and Schlumberger Limited, the US operations of Schlumberger. This report focused on valuation and analysis of Baker Hughes Inc. (BHI) Valuation method is the traditional Discounted Cash Flow method. Based on the results of estimation, value of the firm is 27,386 million, and value of equity is 25,725 million. The intrinsic stock price is $59.55 per share which is very close to the market price of $57.17. For value investors, recommendation is to hold and see at this point. II. Brief Overview of Baker Hughes Inc. and Economy Baker Hughes is one of the world's largest oilfield services companies that structured in two distinct segments. The first supplies products and services directly related to the drilling and evaluation. The second segment provides physical drilling services that include everything from wellbore construction to pipeline transportation and maintenance programs. Moreover, they offer a wide range of pump and maintenance systems and programs. Baker Hughes belongs to the oilfield services (OFS) industry. And the industry is facing an exciting, complex, and uncharted landscape. Few industries today face greater economic, technical, geographic, and operational opportunities and challenges. Growing global demand for energy coupled with tight worldwide supply of crude and hydro-carbon products will likely mean price volatility going forward, despite the current recession of economy. At the same time, the industry faces the rapid decline of mature assets. Authorities estimate that more than 80% of the world’s
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