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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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00:00:01
>> GE putting a major stake in the ground amid slumping oil prices. On Monday, expanding its oil and gas business through a proposed merger with Baker Hughes, the third largest provider of oilfield equipment and services. The deal would create a new publicly traded energy powerhouse with more than $32 billion in revenue, with GE owning roughly 60% of the company.
00:00:25
CEO Jeff Immelt betting a merger will be a more cost effective way to benefit from any rebound in the battered energy industry. Reuters 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 in a $45 to $65 band until 2019.
00:00:49
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 that and betting on the idea that OPEC may not curtail production at its next meeting, so there are a lot of risk factors in the oil market right now.
00:01:11
>> Over the past two years, oil prices have dropped from roughly $100 a barrel to as low 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. The question now, what's next for Halliburton, whose bid to buy Baker Hughes was blocked by regulators in May, and which would slip to the number three slot behind a GE Baker Hughes tie-up.
00:01:38
>> One area that analysts say they could grow in is 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.>> The GE, Baker Hughes deal still needs to pass muster with antitrust officials.