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Business

GE powers energy merger with Baker Hughes

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Opening sequence

Business

GE powers energy merger with Baker Hughes

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COMING UP:GE powers energy merger with Baker Hughes

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Transcript

00:00:01
>> GE putting a major stake in the ground amid slumping oil prices. On Monday expanding it's oil and gas business through a proposed merger with Baker Hughes. The third largest provider of oil field equipment and services. The deal would create a new publicly traded energy powerhouse with more than $32 billion in revenue.
00:00:22
With GE owning roughly 60% of the company. CEO Jeff Immelt betting a merger will be a more cost-effective way to benefit from any rebound in the battered energy industry. Reuter's Energy Correspondent Jessica Resnick-Ault.>> So one thing that was really interesting about this deal is that GE says that it will be profitable, even with quite a low threshold for oil prices.
00:00:46
And a 45 to $65 band until 2019. And so they're giving a very conservative estimate on what prices might do. And I think it's prudent to do that right now, because the market is being quite conservative. People are suggesting and betting on the idea that OPEC may not curtail production at its next meeting.
00:01:08
So there are a lot of risk factors in the oil market right now.>> Over the past two years, oil prices have dropped from roughly $100 a barrel to as slow as $30, but have been on the rise lately. The downturn forcing consolidation in the space, with top rival Schlumberger buying equipment maker Cameron International.
00:01:26
The question now, what's next for Halliburton? Who's bid to buy Baker Hughes was blocked by regulators in May. And which would slip to the number three spot behind a GE, Baker Hughes tie up.>> One area the analysts say they could grow in subsea or underwater drilling. So, they may need to team up with a subsea underwater drilling service provider who can help them provide the whole value chain of drilling services.
00:01:58
>> The GE Baker Hughes deal still needs to pass muster with anti-trust officials.