Baker Hughes (BKR) 10-K risk factor changes: FY2019 vs FY2018

[removed: Risk] [added: Risk] Factors Related to Our [removed: Business][added: Business]

[removed: We] [added: *We] operate in a highly competitive environment, which may adversely affect our ability to [removed: succeed.][added: succeed.*]

[added: In order to be competitive, we must provide new] technologies, reliable products and services that perform as expected and that create value for our customers, and successfully recruit, train and retain competent personnel.

[removed: The] [added: *The] high cost or unavailability of infrastructure, materials, equipment, supplies and [removed: personnel, particularly in periods of rapid growth,] [added: personnel] could adversely affect our ability to execute our operations on a timely [removed: basis.][added: basis.*]

[removed: Our] [added: *Our] business could be impacted by geopolitical and terrorism threats in countries where we or our customers do business and our business operations may be impacted by civil unrest, government expropriations and/or epidemic [removed: outbreaks.][added: outbreaks.*]

[removed: Compliance] [added: *Compliance] with and changes in laws could be costly and could affect operating results.

In addition, government disruptions could negatively impact our ability to conduct our [removed: business.][added: business.*]

[removed: Increased] [added: *Increased] cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted computer crime could pose risks to our systems, networks, products, solutions, services and [removed: data.][added: data.*]

[removed: Our] [added: *Our] failure to comply with the Foreign Corrupt Practices Act (FCPA) and other similar laws could have a negative impact on our ongoing [removed: operations.][added: operations.*]

[removed: Anti-money] [added: *Anti-money] laundering and anti-terrorism financing laws could have significant adverse consequences for [removed: us.][added: us.*]

This program includes policies, procedures, processes and other internal controls designed to identify, monitor, manage and mitigate the risk of money laundering or terrorist financing posed by our products, services, customers [added: and geographic locale.]

[removed: Changes] [added: *Changes] in tax laws, tax rates, tariffs, adverse positions taken by taxing authorities, and tax audits could impact operating [removed: results.][added: results.*]

[removed: Our] [added: *Our] operations involve a variety of operating hazards and risks that could cause [removed: losses.][added: losses.*]

[removed: While we maintain insurance protection against some of these risks, and seek to obtain indemnity agreements from our customers requiring the customers to hold us harmless from some of these risks, our] [added: Our] insurance and contractual indemnity protection may not be sufficient or effective to protect us under all circumstances or against all risks.

[removed: Compliance] [added: *Compliance] with, and rulings and litigation in connection with, environmental and climate change regulations and the environmental and climate change impacts of our or our customers’ operations may adversely affect our business and operating [removed: results.][added: results.*]

We are unable to predict whether and when the proposed changes in laws or regulations ultimately will occur or what they ultimately [added: will require, and accordingly, we are unable to assess the potential financial or operational impact they may have on our business.]

Other developments focused on restricting GHG emissions include the United Nations Framework Convention on Climate Change, which includes the Paris Agreement and the Kyoto Protocol; the European Union Emission Trading System; Article 8 of the European Union Energy Efficiency Directive and the United Kingdom’s [removed: Carbon Reduction Commitment] Energy [removed: Efficiency and Energy] Savings Opportunity [removed: (ESOS) schemes;] [added: Scheme(ESOS);] and, in the United States, the Regional Greenhouse Gas Initiative, the Western Climate Action Initiative, and various state programs implementing the California Global Warming Solutions Act of 2006 (known as Assembly Bill 32).

[removed: Uninsured] [added: *Uninsured] claims and litigation against us could adversely impact our operating [removed: results.][added: results.*]

[removed: Control] [added: *Control] of oil and natural gas reserves by state-owned oil companies may impact the demand for our services and products and create additional risks in our [removed: operations.][added: operations.*]

[removed: Providing] [added: *Providing] services on an integrated or turnkey basis could require us to assume additional [removed: risks.][added: risks.*]

[removed: Some] [added: *Some] of our customers require bids in the form of fixed pricing [removed: contracts.][added: contracts.*]

[removed: The] [added: *The] credit risks of having a concentrated customer base in the energy industry could result in [removed: losses.][added: losses.*]

[removed: Our] [added: *Our] Remaining Performance Obligations (RPO) are subject to modification, termination or reduction of orders, which could negatively impact our [removed: sales.][added: sales.*]

The total dollar amount of the Company’s RPO as of December 31, [removed: 2018] [added: 2019] was [removed: $21.0] [added: $22.9] billion.

[removed: We] [added: *We] may not be able to satisfy technical requirements, testing requirements or other specifications required under our service contracts and equipment purchase [removed: agreements.][added: agreements.*]

[removed: We cannot provide assurance that our products will be able to satisfy the specifications or that we will be able to perform the] full-scale testing necessary to prove that the product specifications are satisfied in future contract bids or under existing contracts, or that the costs of modifications to our products to satisfy the specifications and testing will not adversely affect our results of operations.

[removed: Currency] [added: *Currency] fluctuations or devaluations may impact our operating [removed: results.][added: results.*]

[removed: Changes] [added: *Changes] in economic and/or market conditions may impact our ability to borrow and/or cost of [removed: borrowing.][added: borrowing.*]

[removed: An] [added: *An] inability to [added: obtain, maintain,] protect [added: or enforce] our intellectual property rights could adversely affect our [removed: business.][added: business.*]

There can be no assurance that the steps we take to obtain, [removed: maintain and] [added: maintain,] protect [added: and enforce] our intellectual property rights will be completely adequate.

We are a party to a number of licenses that give us rights to intellectual property that is necessary or useful to our [removed: business, including from GE following the Transactions.][added: business.]

Our success depends in part on the ability of our licensors to obtain, [removed: maintain] [added: maintain, protect] and sufficiently enforce the licensed intellectual property rights we have commercialized.

We would be adversely affected in the event these agreements were terminated without the right [added: for us] to continue [added: accessing and using] such [removed: access] [added: licensed intellectual property] as we might continue to improve current products and services or develop new ones.

[removed: We] [added: *We] may be subject to litigation if another party claims that we have infringed [removed: upon] [added: upon, misappropriated or otherwise violated] its intellectual property [removed: rights.][added: rights.*]

The tools, techniques, methodologies, programs and components we use to provide our products and services may infringe [removed: upon] [added: upon, misappropriate or otherwise violate] the intellectual property rights of others or be challenged on that basis.

Regardless of the merits, [removed: infringement] [added: any such] claims may result in significant legal and other costs and may distract management from running our core business.

Resolving such claims could increase our costs, including through royalty payments to acquire licenses, if available, from third parties and through the development of [removed: non-infringing] [added: replacement] technologies.

[removed: The] [added: *The] effects of Brexit may have a negative impact on our financial results and operations of the [removed: business.][added: business.*]

[removed: The political and economic] [added: This] uncertainty [removed: surrounding Brexit, if it occurs or in whatever form it occurs,] could harm our business and financial results due to fluctuations in the value of the British pound versus the U.S. dollar, euro and other currencies.

[removed: Risk] [added: Risk] Factors Related to the Worldwide Oil and Natural Gas [removed: Industry][added: Industry]

We are also developing artificial intelligence products and services with a third party.

There are no assurances that we will be able to successfully develop an artificial intelligence platform that will effectively address the artificial intelligence related needs of our customers.

In addition, the agreement with the third party is subject to term limitations and there are no assurances that a future agreement, if any, will have the same terms as the current agreement.

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Regulatory requirements related to Environmental, Social and Governance (ESG) or sustainability reporting have been issued in the European Union that applies to financial market participants, with implementation and enforcement expected in 2021.

In the United States, such regulations have been issued related to pension investments in California, and for the responsible investment of public funds in Illinois.

Additional regulation is pending in other states.

We expect regulatory requirements related to ESG matters to continue to expand globally.

The Company is committed to transparent and comprehensive reporting of our sustainability performance, and considers existing standards such as the Global Reporting Initiative’s G4 guidelines, the Sustainability Accounting Standards Board’s documentation, International Petroleum Industry Environmental Conservation Association's (IPIECA) Sustainability Reporting Guidance and recommendations issued by the Task Force for Climate Related Financial Disclosures.

If we are not able to meet future sustainability reporting requirements of regulators or current and future expectations of investors, customers or other stakeholders, our business and ability to raise capital may be adversely affected.

Baker Hughes Company 2019 FORM 10-K | 15

*We sometimes enter into consortium or similar arrangements for certain projects which could impose additional costs and obligations on us.*

We sometimes enter into consortium or similar arrangements for certain projects.

Under such arrangements, each party is responsible for performing a certain scope of work within the total scope of the contracted work, and the obligations expire when all contractual obligations are completed.

The failure or inability, financially or otherwise, of any of the parties to perform their obligations could impose additional costs and obligations on us.

These factors could result in unanticipated costs to complete the project, liquidated damages or contract disputes.

We cannot provide assurance that our products will be able to satisfy the specifications or that we will be able to perform the

Baker Hughes Company 2019 FORM 10-K | 16

We would be adversely affected in the event that any such license agreement was terminated without the right for us to continue using the licensed intellectual property.

United Kingdom has exited (Brexit) the European Union (EU) on January 31, 2020.

As per the terms of the exit the UK has ceased to be an EU member but will continue to follow its rules and contribute to its budget for an 11 month transition period ending December 31, 2020.

The purpose of the transition period is to give time for the UK and EU to negotiate their future relationship, including a trade deal.

There remains significant uncertainty on the outcome of the negotiations and the terms of a future trade deal, if any.

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We are also a party to a number of licenses with GE that give us rights to intellectual property that is necessary or useful to our business.

*Although we no longer are a “controlled company” after the completion of a secondary offering in September 2019, GE and its affiliates continue to own approximately 36.7% of the voting power of all classes of our outstanding voting stock, and the interests of GE may differ from the interests of other stockholders of the Company.*

GE and its affiliates are no longer a majority stockholder after the completion of a secondary offering in September 2019.

GE may still exercise significant influence over matters submitted to our stockholders for approval through its ownership of our Class B common stock, which at December 31, 2019 represented approximately 36.7% of the voting power of all classes of our outstanding voting stock.

In addition, pursuant to the provisions set forth in our charter, our bylaws and the Amended and Restated Stockholders Agreement, dated as of November 13, 2018, by and between us and GE, as amended from time to time, the number of individuals who GE is entitled to designate to our board of directors is reduced from five to one.

Failure of GE to comply with these agreements could have an adverse impact on our business operations.

Pursuant to the Amended and Restated Registration Rights Agreement, dated July 31, 2019, as further amended from time to time, GE has the right to cause us, in certain instances, at our expense, to register resales of our Class A common stock held by GE under the Securities Act.

These shares also may be sold pursuant to Rule 144 under the Securities Act, subject to restrictions while GE is deemed to be our affiliate.

We cannot assure you if or when any future offerings or resales of these shares may occur.

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In order to be competitive, we must provide new

BHGE 2018 FORM 10-K | 11

Raw materials and components of particular concern include steel alloys (including chromium and nickel), titanium, barite, beryllium, copper, lead, tungsten carbide, synthetic and natural diamonds, gels, sand and other proppants, printed circuit boards and other electronic components and hydrocarbon-based chemical feed stocks.

Our ability to repair or replace equipment damaged or lost in the well can also impact our ability to service our customers.

A lack of manufacturing capacity could result in increased backlog, which may limit our ability to respond to orders with short lead times.

Likewise, if the economy or markets decline or other changes occur, we may have to reduce utilization of our assets or adjust our workforce to control costs, which may cause us to lose some of our skilled employees.

Labor-related actions, including strikes, slowdowns and facility occupations can also have a negative impact on our business.

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Our compliance program depends on the efforts of our employees, agents, distributors and other business partners to comply with applicable law and our internal policies.

BHGE 2018 FORM 10-K | 13

and geographic locale.

BHGE 2018 FORM 10-K | 14

will require, and accordingly, we are unable to assess the potential financial or operational impact they may have on our business.

This insurance has deductibles or self-insured retentions and contains certain coverage exclusions.

The insurance does not cover damages from breach of contract by us or based on alleged fraud or deceptive trade practices.

In addition, the following risks apply with respect to our insurance coverage:

| | |

| --- | --- |

| • | we may not be able to continue to obtain insurance on commercially reasonable terms; |

| • | we may be faced with types of liabilities that will not be covered by our insurance; |

| • | our insurance carriers may not be able to meet their obligations under the policies; or |

| • | the dollar amount of any liabilities may exceed our policy limits. |

These customers may provide us with inaccurate information in relation to their reserves.

The estimation of reserves is a process that involves subjective judgment about likely location and volume, and estimates that prove

BHGE 2018 FORM 10-K | 15

inaccurate may result in cost over-runs, delays, and project losses for us or our customers, which may adversely impact our business and our relationship with our customers.

If our products are unable to satisfy such requirements, or we are unable to perform any required full-scale testing, our customers may cancel their contracts and/or seek new suppliers, and our business, results of operations, cash flows or financial position may be adversely affected.

Most of our products and services are sold through contracts denominated in U.S. dollars or local currency indexed to U.S. dollars, however, some of our revenue, local expenses and manufacturing costs are incurred in local currencies and therefore changes in the exchange rates between the U.S. dollar and foreign currencies can increase or decrease our revenue and expenses reported in U.S. dollars or revenue and expenses of our customers and, consequently, may impact the ability of our customers to satisfy their payment obligations and our results of operations.

BHGE 2018 FORM 10-K | 16

Specifically we are a party to several agreements with GE which provide for intellectual property rights to use and access.

Access and use of intellectual property created solely or collaboratively with GE is an important part of our operations.

In June 2016, United Kingdom (UK) voters approved the UK’s exit (Brexit) from the European Union (EU).

Lower oil and natural gas prices generally lead to decreased spending by our customers.

While higher oil and natural gas prices generally lead to increased spending by our customers, sustained high energy prices can be an impediment to economic growth, and can therefore negatively impact spending by our customers.

Our customers also take into account the volatility of energy prices and other risk factors by requiring higher returns for individual

BHGE 2018 FORM 10-K | 17

projects if there is higher perceived risk.

Any of these factors could affect the demand for oil and natural gas and could have a material effect on our results of operations.

Weakness or deterioration of the global economy or credit markets could reduce our customers’ spending levels and reduce our revenue and operating results.

Incremental weakness in global economic activity, particularly in China, India, Europe, the Middle East and developing countries in Asia, could reduce demand for oil and natural gas and result in lower oil and natural gas prices.

[removed: EXECUTIVE SUMMARY][added: EXECUTIVE SUMMARY]

We operate through our four business segments: Oilfield Services (OFS), Oilfield Equipment (OFE), Turbomachinery & [removed: Processing] [added: Process] Solutions (TPS), and Digital Solutions (DS).

In June 2018, GE announced their intention to pursue an orderly separation from [removed: BHGE] [added: us] over time.

Second, for our [removed: Digital] [added: digital] software and technology business we [removed: will] [added: agreed to] maintain the status quo as the exclusive supplier of GE Digital [removed: oil-and-gas applications.][added: oil and-gas applications, although this commercial arrangement was modified pursuant to the Omnibus Agreement, discussed below, including by rendering the relationship with GE Digital to be nonexclusive with respect to digital offerings in the oil and gas space.]

Related Party [removed: Disclosures"] [added: Transactions"] of the Notes to Consolidated and Combined Financial Statements in Item 8 herein.

In addition, we expect to incur one-time charges related to [added: the] separation from GE of approximately $0.2 billion to $0.3 billion over [removed: the next] three years.

Risk [removed: Factors-Risks] [added: Factors-Risk] Factors Related to the [removed: Transactions and] Separation from GE.”

In [removed: 2018,] [added: 2019,] we generated revenue of [removed: $22,877] [added: $23,838] million, compared to [removed: $17,179] [added: $22,877] million in [removed: 2017.][added: 2018.]

[removed: Income] [added: In 2018, loss] before income taxes and equity in loss of affiliate was $680 [removed: million in 2018, and] [added: million, which also] included restructuring and impairment charges of $433 [removed: million] [added: million,] and [removed: merger] [added: separation] and [added: merger] related costs of $153 million.

[removed: In 2017, loss] [added: Income] before income taxes and equity in loss of affiliate was [removed: $335 million, which also] [added: $753 million in 2019, and] included restructuring and impairment charges of [removed: $412 million,] [added: $342 million] and [removed: merger] [added: separation] and [added: merger] related costs of [removed: $373] [added: $184] million.

[removed: OUTLOOK][added: OUTLOOK]

| • | Liquefied [removed: Natural Gas (LNG)] [added: natural gas] projects: we remain optimistic on the LNG market. While currently oversupplied, we believe a significant number of final investment decisions are needed to fill the projected supply-demand [removed: imbalance in the early to middle part of the next decade.] [added: imbalance.] In [removed: 2018,] [added: 2019,] we [removed: saw] [added: have seen multiple large-scale LNG projects reach a] positive final investment [removed: decisions for new LNG capacity.] [added: decision.] We continue to view the long-term economics of the LNG industry as [removed: positive given our outlook for supply and demand.] [added: positive.] |

| • | Refinery, petrochemical and industrial projects: in refining, we believe large, complex refineries should gain advantage in a more competitive, oversupplied landscape in 2019 as the industry globalizes and refiners position to meet local demand and secure export potential. [removed: In petrochemicals, we continue to see healthy demand and cost-advantaged supply driving projects forward in 2019.] The industrial market continues to grow as outdated infrastructure is replaced, policy changes come into effect and power is decentralized. We continue to see growing demand across these markets in [removed: 2019.] [added: 2020.] |

[removed: In] [added: While governments may change or may not continue incentives for renewable energy additions, in] the long term, renewables' cost decline may accelerate to compete with new-built fossil capacity.

[removed: BUSINESS ENVIRONMENT][added: BUSINESS ENVIRONMENT]

The following discussion and analysis summarizes the significant factors affecting our results of operations, financial condition and liquidity position as of and for the year ended December 31, [removed: 2018, 2017] [added: 2019] and [removed: 2016,] [added: 2018,] and should be read in conjunction with the consolidated and combined financial statements and related notes of the Company.

[removed: Oil] [added: Oil] and Natural Gas [removed: Prices][added: Prices]

| Brent oil prices ($/Bbl) [removed: (1) | $ | 71.34 | |] [added: (1)] | $ | [removed: 54.12] [added: 64.28] | | | $ | [removed: 43.64] [added: 71.34] | |

| WTI oil prices ($/Bbl) [removed: (2) | 65.23 | | |] [added: (2)] | [removed: 50.80] [added: 56.98] | | | | [removed: 43.29] [added: 65.23] | | |

| Natural gas prices ($/mmBtu) [removed: (3) | 3.15 | | |] [added: (3)] | [removed: 2.99] [added: 2.56] | | | | [removed: 2.52] [added: 3.15] | | |

In North America, natural gas prices, as measured by the Henry Hub Natural Gas Spot Price, averaged [removed: $3.15/mmBtu] [added: $2.56/mmBtu] in [removed: 2018,] [added: 2019,] representing a [removed: 6% increase] [added: 19% decrease] over the prior year.

Throughout the year, Henry Hub Natural Gas Spot Prices ranged from a high of [removed: $6.24/mmBtu] [added: $4.25/mmBtu] in [removed: January 2018] [added: March 2019] to a low of [removed: $2.49/mmBtu] [added: $1.75/mmBtu] in [removed: February 2018.][added: December 2019.]

According to the U.S. Department of Energy (DOE), working natural gas in storage at the end of [removed: 2018] [added: 2019] was [removed: 2,705] [added: 3,192] billion cubic feet (Bcf), which was [removed: 15.6%,] [added: 15.3%,] or [removed: 421] [added: 487] Bcf, [removed: below] [added: above] the corresponding week in [removed: 2017.][added: 2018.]

[removed: Baker] [added: Baker] Hughes Rig [removed: Count][added: Count]

We gather all relevant data through our field service personnel, who obtain the necessary data from routine visits to the various rigs, customers, contractors and [removed: other outside sources as necessary.]

| North America | [removed: 1,223 | | | 1,082] [added: 1,077] | | | [removed: 642] [added: 1,223] | |

| International | [removed: 988 | | | 948] [added: 1,097] | | | [removed: 956] [added: 988] | |

| Worldwide | [removed: 2,211 | | | 2,030] [added: 2,174] | | | [removed: 1,598] [added: 2,211] | |

[removed: 2018 Compared to 2017][added: 2019 Compared to 2018]

Overall the rig count was [removed: 2,211] [added: 2,174] in [removed: 2018, an increase] [added: 2019, a decrease] of [removed: 9%] [added: 2%] as compared to [removed: 2017] [added: 2018] due primarily to North American activity.

Internationally, the rig count increased [removed: 4%] [added: 11%] in [removed: 2018] [added: 2019] as compared to the same period last year.

Within North America, the [removed: increase] [added: decrease] was primarily driven by the [removed: U.S.] [added: Canadian] rig count, which was [removed: up 18%] [added: down 30%] on average [removed: versus 2017, partially offset with] [added: when compared to the same period last year, and] a decrease in the [removed: Canadian] [added: U.S.] rig count, which was down [removed: 8%] [added: 9%] on average.

[removed: Internationally,] [added: Excluding Ukraine,] the [added: international] rig count [removed: decreased 1% in 2017 as] [added: was up 6% when] compared to the same period last year.

[removed: RESULTS] [added: RESULTS] OF [removed: OPERATIONS][added: OPERATIONS]

The performance of our operating segments is evaluated based on segment operating income (loss), which is defined as income (loss) before income taxes and equity in loss of affiliate and before the following: net interest expense, net other non operating income, corporate expenses, restructuring, impairment and other charges, inventory impairment, [removed: merger] [added: separation] and [added: merger] related costs, and certain gains and losses not allocated to the operating segments.

[removed: Volume:] [added: Volume:] Volume is the increase or decrease in products and/or services sold period-over-period excluding the impact of foreign exchange and price.

[removed: Foreign] [added: Foreign] Exchange [removed: (FX):] [added: (FX):] FX measures the translational foreign exchange impact, or the translation impact of the period-over-period change on sales and costs directly attributable to change in the foreign exchange rate compared to the [removed: US] [added: U.S.] dollar.

[removed: (Inflation)/Deflation:] [added: (Inflation)/Deflation:] (Inflation)/deflation is defined as the increase or decrease in direct and indirect costs of the same type for an equal amount of volume.

[removed: Productivity:] [added: Productivity:] Productivity is measured by the remaining variance in profit, after adjusting for the period-over-period impact of volume & price, foreign exchange and (inflation)/deflation as defined above.

[removed: Orders] [added: Orders] and Remaining Performance [removed: Obligations][added: Obligations]

For management's discussion and analysis of our financial condition and results of operations for fiscal year 2018 as compared to fiscal year 2017 please refer to Part II, Item 7 "Management's discussion and analysis of financial condition and results of operations" on Form 10-K for our fiscal year ended December 31, 2018, filed with the SEC on February 19, 2019.

We are an energy technology company with a diversified portfolio of technologies and services that span the energy and industrial value chain.

We conduct business in more than 120 countries and employ approximately 68,000 employees.

We sell products and services primarily in the global oil and gas markets, within the upstream, midstream and downstream segments.

Throughout 2019, the industry experienced continued volatility, with North America activity declining versus 2018, and growth internationally.

Offshore markets remained relatively stable, with approximately 300 subsea trees being awarded.

2019 was a strong year for liquefied natural gas (LNG) related markets, with 71 million tons per annum of final investment decisions being reached on projects.

Lastly, global GDP growth remained healthy throughout 2019, with some headwinds across the power sector.

The increase in revenue was driven primarily by increased activity in OFS and OFE partially offset by declines in TPS and DS.

Separation and merger related costs include costs incurred in connection with the separation from GE and the finalization of the Master Agreement Framework.

In the fourth quarter of 2018, we entered into a Master Agreement Framework which includes a series of related ancillary agreements and binding term sheets (which were later negotiated into definitive agreements) designed to further solidify the commercial and technological collaboration between us and GE.

All agreements within the Master Agreement Framework were finalized by the first quarter of 2019.

On July 31, 2019, we also entered into an Omnibus Agreement, a general framework agreement that addresses certain outstanding matters under existing long-term commercial agreements between us and GE.

The Omnibus Agreement contains provisions regarding, among other things, (i) the repayment of certain outstanding amounts mutually owed by the parties, (ii) certain employee and assets transfers (including the allocation of costs and expenses associated therewith), and (iii) certain matters related to three international joint ventures.

Modifications to the commercial arrangements between us and GE included, among other things, modification of the relationship between BHGE LLC and GE Digital to be nonexclusive with respect to digital offerings in the oil and gas space.

For further details on these agreements see "Note 19.

On September 16, 2019, certain equity transactions were

Baker Hughes Company 2019 FORM 10-K | 27

completed and GE’s ownership of Baker Hughes was reduced from approximately 50.3% to approximately 36.8%.

As of December 31, 2019, GE's interest in us was 36.7%.

| • | North America onshore activity: in 2019, we experienced a decline in rig count, as compared to 2018 driven by lower commodity prices over the year. We expect North American onshore activity will continue to decline in 2020. Over the long-term, we remain optimistic about the outlook. |

| • | International onshore activity: we have seen a moderate increase in rig count activity in 2019 and expect growth to continue into 2020, albeit at a slower rate. We expect most of the growth to come from Middle East, Latin America and Europe. |

| • | Offshore projects: we have seen stable customer activity and final investment decisions on offshore projects through 2019. We expect the offshore market fundamentals to support another solid year of orders with subsea tree awards in 2020 expected to remain relatively consistent with 2019. We expect to see continued growth in the flexible pipe market, following a strong orders performance in 2019. |

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| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

| | 2019 | | | | 2018 | | |

Outside North America, customer spending is most heavily influenced by Brent oil prices.

After a volatile fourth quarter of 2018 when oil prices dropped nearly 40%, there was more stability and positive sentiment at the start of 2019.

Brent oil prices increased from a low of $53.23/Bbl in January 2019, to a high of $74.94/Bbl in April 2019.

However, the average Brent oil prices decreased to $64.28/Bbl in 2019 from $71.34/Bbl in 2018, primarily due to higher prices in the first three quarters of 2018.

In North America, customer spending is highly driven by WTI oil prices, which similar to Brent oil prices, on average decreased to $56.98/Bbl in 2019 from $65.23/Bbl in 2018, and ranged from a low of $46.31/Bbl in January 2019, to a high of $66.24/Bbl in April 2019.

Baker Hughes Company 2019 FORM 10-K | 29

other outside sources as necessary.

Beginning in the second quarter of 2019, Ukraine was added to the Baker Hughes international rig count.

The Company will continue tracking active drilling rigs in the country going forward.

Historical periods will not be updated.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

On July 3, 2017, we closed the Transactions to combine GE O&G and Baker Hughes, creating a fullstream oilfield technology provider that has a unique mix of integrated oilfield products, services and digital solutions.

The Transactions were executed using a partnership structure, pursuant to which GE O&G and Baker Hughes each contributed their operating assets to a newly formed partnership, BHGE LLC.

As of December 31, 2018, GE holds an approximate 50.4% controlling interest in this partnership and the Company holds an approximate 49.6% economic interest.

The results of operations for the Company include the results of Baker Hughes from July 3, 2017, the date of acquisition, through December 31, 2018.

The majority of the Baker Hughes business operations are included in the Oilfield Services segment.

The Transactions were treated as a “reverse acquisition” for accounting purposes and, as such, the historical financial statements of the accounting acquirer, GE O&G, are the historical financial statements of the Company.

The current year results may not be comparable to prior years as the prior years include the results of Baker Hughes only from July 3, 2017.

As of December 31, 2018, BHGE employs approximately 66,000 employees and operates in more than 120 countries.

To that end, during the fourth quarter of 2018, certain equity transactions were completed and GE’s ownership of BHGE was reduced from approximately 62.5% to approximately 50.4%.

At the same time, we completed the Master Agreement Framework designed to further solidify the commercial and technological collaboration between us and GE and to position us for the future.

For further details on the Master Agreement Framework see "Note 18.

The increase in revenue was driven primarily by OFS as 2018 included the full year results of Baker Hughes compared to only six months in 2017, and to a lesser extent, by DS partially offset by declines in TPS and OFE.

These restructuring and impairment charges were recorded as a result of our continued actions to adjust our operations and cost structure to reflect reduced activity levels.

BHGE 2018 FORM 10-K | 29

| | |

| --- | --- |

| • | North America onshore activity: in 2018, we experienced an acceleration in rig count growth, as compared to 2017, driven by the increase in commodity prices for the first 10 months of the year. In the fourth quarter, WTI prices declined 38% driven by both increased supply and geo-political events. We expect the decline in commodity prices may have a negative impact on activity in North America in 2019. |

| • | International onshore activity: we have seen a moderate increase in rig count activity in 2018 and expect growth to continue into 2019, at a slightly increased rate. We have seen signs of improvement with the increase in commodity prices, but due to continued volatility, we remain cautious as to growth expectations. |

| • | Offshore projects: although commodity prices have been volatile, we have begun to see increasing customer activity on offshore projects and more final investment decisions being made. Subsea tree awards increased in 2018, and we expect tree awards to be roughly flat in 2019, though still at levels significantly below prior 2012 and 2013 peaks. We expect customers to continue to evaluate the timing of final investment decisions, and in light of increased commodity price volatility, there may be some project delays. |

Solar and wind net additions continued to exceed coal and gas throughout 2018.

Governments may change or may not continue incentives for renewable energy additions.

BHGE 2018 FORM 10-K | 30

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 2018 | | | | 2017 | | | | 2016 | | |

2018 demonstrated the volatility of the oil and gas market.

Through the first three quarters of 2018, we experienced stability in the North American and international markets.

However, in the fourth quarter of 2018 commodity prices dropped nearly 40% resulting in increased customer uncertainty.

From an offshore standpoint, through most of 2018, we saw multiple large offshore projects reach positive final investment decisions, and the LNG market and outlook improved throughout 2018, driven by increased demand globally.

In 2018, the first large North American LNG positive final investment decision was reached.

Outside of North America, customer spending is highly driven by Brent oil prices, which increased on average throughout the year.

Average Brent oil prices increased to $71.34/Bbl in 2018 from $54.12/Bbl in 2017, and ranged from a low of $50.57/Bbl in December 2018, to a high of $86.07/Bbl in October 2018.

For the first three quarters of 2018, Brent oil prices increased sequentially.

However, in the fourth quarter, Brent oil prices declined 39% versus the end of the third quarter, as a result of increased supply from the U.S., worries of a global economic slowdown, and lower than expected production cuts.

In North America, customer spending is highly driven by WTI oil prices, which similar to Brent oil prices, on average increased throughout the year.

Average WTI oil prices increased to $65.23/Bbl in 2018 from $50.80/Bbl in 2017, and ranged from a low of $44.48/Bbl in December 2018, to a high of $77.41/Bbl in June 2018.

BHGE 2018 FORM 10-K | 31

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 2018 | | | 2017 | | | 2016 | |

[removed: INTEREST] [added: INTEREST] RATE [removed: RISK][added: RISK]

There were no outstanding interest rate swap agreements as of December 31, [removed: 2018.][added: 2019.]

The following table sets forth our fixed rate long-term debt, excluding [removed: capital] [added: finance] leases, and the related weighted average interest rates by expected maturity dates.

| [removed: (In millions)] [added: *(In millions)*] | [removed: 2019] [added: 2020] | | | | [removed: 2020] [added: 2021] | | | | [removed: 2021] [added: 2022] | | | | [removed: 2022] [added: 2023] | | | | [removed: 2023] [added: 2024] | | | | [removed: Thereafter] [added: Thereafter] | | | | [removed: Total (2)] [added: Total (2)] | | |

| Long-term debt (1) | $ | — | | | $ | — | | | $ | [removed: 513] [added: 1,250] | | | $ | [removed: 1,250] [added: —] | | | $ | [removed: —] [added: 107] | | | $ | [removed: 4,188] [added: 4,606] | | | $ | [removed: 5,951] [added: 5,963] | |

| Weighted average interest rates | — | | % | | — | | % | | [removed: 2.49] [added: 2.88] | | % | | [removed: 2.88] [added: —] | | % | | [removed: —] [added: 4.06] | | % | | [removed: 3.90] [added: 3.82] | | % | | [removed: 3.57] [added: 3.64] | | % |

| (1) | Fair market value of our fixed rate long-term debt, excluding [removed: capital] [added: finance] leases, was [removed: $5.6] [added: $6.4] billion at December 31, [removed: 2018.] [added: 2019.] |

[removed: FOREIGN] [added: FOREIGN] CURRENCY EXCHANGE [removed: RISK][added: RISK]

We had outstanding foreign currency forward contracts with net notional amounts aggregating [removed: $2.8] [added: $1.8] billion and [removed: $3.3] [added: $2.8] billion to hedge exposure to currency fluctuations in various foreign currencies at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively.

As of December 31, [removed: 2018,] [added: 2019,] the Company estimates that a 1% appreciation or depreciation in the U.S. dollar would result in an impact of less than $5 million to our pre-tax earnings, however, the Company is generally able to mitigate its foreign exchange exposure, where there are liquid financial markets, through use of foreign currency derivative transactions.

Also, see "Note [removed: 16.][added: 17.]

Baker Hughes Company 2019 FORM 10-K | 43

| As of December 31, 2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Baker Hughes Company 2019 FORM 10-K | 44

BHGE 2018 FORM 10-K | 47

| As of December 31, 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | |

BHGE 2018 FORM 10-K | 48

[removed: Baker Hughes, a GE company (the Company, BHGE, we, us, or our), a Delaware corporation,] [added: The Company] was formed [removed: on October 28, 2016, for] [added: as] the [removed: purpose] [added: result] of [removed: facilitating the] [added: a] combination [removed: of] [added: between] Baker Hughes [removed: Incorporated, a Delaware corporation (Baker Hughes or BHI),] [added: Incorporated (BHI)] and the oil and gas business (GE O&G) of General Electric Company [removed: (GE).][added: (GE) (the Transactions), which resulted in GE owning approximately 62.5% of the Company.]

As a result of the Transactions, substantially all of the business of GE O&G and of Baker [removed: Hughes] [added: Hughes,] was transferred to a subsidiary of the Company, Baker Hughes, a GE company, LLC (BHGE [removed: LLC) with GE having an economic interest of approximately 62.5% and the Company having an economic interest of approximately 37.5% of BHGE LLC.][added: LLC).]

In June 2018, GE announced their intention to pursue an orderly separation from [removed: BHGE] [added: Baker Hughes] over time.

[removed: On] [added: In] November [removed: 13,] 2018, we entered into a Master Agreement and a series of related ancillary agreements and binding term sheets with GE [added: and BHGE LLC] (collectively, the Master Agreement [removed: Framework)] [added: Framework, which were later negotiated into definitive agreements)] designed to further solidify the commercial and technological [removed: collaborations] [added: collaboration] between us and [removed: GE and to facilitate our ability to transition from operating as a controlled company.][added: GE.]

Risk Factors-Risks Factors Related to the [removed: Transactions and] Separation from GE.” For further details on the Master Agreement [removed: Framework,] [added: Framework and Omnibus Agreement,] see "Note [removed: 18.][added: 19.]

[removed: In] [added: To that end, in] November 2018, we [removed: also] completed [removed: an underwritten] [added: a] secondary public offering in which GE and its affiliates [removed: (together, the selling stockholders)] sold 101.2 million shares of our Class A common stock.

We did not receive any proceeds from the shares sold by [removed: the selling stockholders] [added: GE and its affiliates] in this offering.

The offering included the exchange by [removed: the selling stockholders] [added: GE and its affiliates] of common units of BHGE LLC [removed: (Units) (together] [added: (LLC Units), together] with the corresponding shares of our Class B common [removed: stock)] [added: stock,] for our Class A common [removed: stock, which resulted in increases in capital in excess of par value, with offsetting reductions in noncontrolling interests and other comprehensive income.][added: stock.]

Also, in November 2018, we repurchased 65 million [removed: BHGE LLC Units (together with the corresponding shares] of our Class B common [removed: stock)] [added: stock, together with an equal number of associated LLC Units,] from GE and its affiliates for $1.5 [removed: billion, or $22.48 per unit, which is the same per share price, net of discounts and commissions, paid by the underwriters to the selling stockholders in the offering (the repurchase).][added: billion.]

In connection with [removed: the] [added: this] repurchase, the corresponding shares of Class B common stock [removed: held by GE] and [removed: its affiliates] [added: LLC Units] were canceled.

As a result of [removed: the] [added: this] secondary offering and [removed: the] repurchase, GE's [removed: economic] interest in [removed: BHGE LLC] [added: Baker Hughes] was reduced from approximately 62.5% to approximately 50.4%.

[removed: OUR VISION][added: OUR VISION]

In [removed: 2018,] [added: 2019,] we generated revenue of [removed: $22.9 billion] [added: $23,838 million] and conducted business in more than 120 countries.

With the breadth of our portfolio, [removed: innovative technology solutions] [added: leading technology,] and unique [removed: business and] partnership models, we are positioned to deliver outcome-based solutions across the industry.

[removed: The oil and gas macroeconomic environment continues to be dynamic, and we] [added: We] believe the industry is going through a transformation that requires a change in how we work.

Our strategy is based on three growth [removed: pillars:][added: areas:]

In January 2019, we made a commitment to reduce CO2 equivalent (eq.) emissions [added: from our operations by] 50 percent by 2030, achieving net-zero CO2 eq.

We [removed: will also invest] [added: are investing] in our portfolio of advanced technologies to assist customers with reducing their carbon footprint.

We [removed: have already achieved] [added: reported in our 2018 Corporate Social Responsibility report] a [removed: 26%] [added: 34%] reduction in [removed: its] [added: operating] emissions since 2012 through a commitment to new technology and operational efficiencies.

| [removed: •] [added: •] | [removed: Complete fullstream] [added: Scope and scale: We have global presence and a broad, diversified] portfolio. [removed: Leading portfolio of] [added: Our] products, [removed: services] [added: services,] and expertise [removed: capable of serving] [added: serve the] upstream, midstream/liquefied natural gas (LNG) and downstream sectors of the oil and gas industry, [removed: matching oilfield service] [added: as well as broader chemical] and [removed: equipment] [added: industrial segments, matching energy] leaders in many areas. We deliver [removed: across the value chain] through our four product [removed: companies:] [added: companies (also referred to as operating segments):] Oilfield Services; Oilfield Equipment; Turbomachinery & Process Solutions; and Digital Solutions as discussed below under "Products and [removed: Services,] [added: Services,"] and each are among the top four providers in their respective segments. |

| • | [removed: Technology. We have a] [added: Technology: Our] culture [added: is] built on a heritage of innovation and invention in research and development, with complementary capabilities. Technology remains a differentiator for us, and a key enabler to drive the efficiency and productivity gains our customers need. We also have a range of technologies that support our [removed: customers] [added: customers'] efforts to reduce their carbon footprint. We remain committed to investing in our products and services to maintain our leadership position across our offerings, including [removed: $700] [added: $687] million research & development spend in [removed: 2018.] [added: 2019.] |

[removed: ORDERS] [added: ORDERS] AND REMAINING PERFORMANCE [removed: OBLIGATIONS][added: OBLIGATIONS]

As of December 31, [removed: 2018, 2017] [added: 2019, 2018] and [removed: 2016,] [added: 2017,] the [removed: aggregate amount of transaction price allocated to unsatisfied (or partially unsatisfied)] [added: remaining] performance obligations totaled [removed: $21.0] [added: $22.9] billion, $21.0 [removed: billion,] [added: billion] and [removed: $21.8] [added: $21.0] billion, respectively.

[removed: PRODUCTS] [added: PRODUCTS] AND [removed: SERVICES][added: SERVICES]

[removed: Oilfield Services][added: Oilfield Services]

The Oilfield Services (OFS) segment provides products and services for [removed: on] [added: onshore] and offshore operations across the lifecycle of a well, ranging from drilling, evaluation, completion, production, and intervention.

The segment includes product lines that design and manufacture products and [added: provide] services to help operators find, evaluate, drill, and produce hydrocarbons.

With [removed: the industry’s broadest] [added: our broad] completions portfolio, OFS can provide tailored well integrity solutions for all well types.

Drawing from a wide range of [added: chemical and] artificial lift [removed: technology,] [added: technologies,] coupled with [removed: enterprise] [added: production] optimization software, OFS can help lower the cost per barrel for the life of an asset.

Our customers include the large integrated major and super-major oil and natural gas companies, U.S. and international independent oil and natural gas [removed: companies] [added: companies,] and the national or state-owned oil companies as well as oilfield service companies.

[removed: Oilfield Equipment][added: Oilfield Equipment]

[removed: The Oilfield Equipment (OFE) segment provides a broad portfolio of] [added: These] products and services [added: are] required to facilitate the safe and reliable [added: control and] flow of hydrocarbons from the [removed: subsea] wellhead to the [removed: surface] production facilities.

[removed: The] OFE [removed: operation] designs and manufactures [removed: onshore] [added: subsea] and [removed: offshore] [added: surface] drilling and production systems and [removed: equipment for floating production platforms and] provides a full range of services related to onshore and offshore drilling [removed: activities.][added: and production operations.]

The OFE segment includes [removed: deepwater] [added: subsea and surface] drilling equipment, subsea production systems (SPS), flexible pipe [removed: systems,] [added: systems for subsea flowlines, risers and] onshore [added: pipes, surface and subsea] wellheads, [added: surface pressure control equipment, subsea well intervention solutions] and related service solutions.

The OFE drilling [removed: and production systems] product line offers blowout preventers, control systems, marine drilling risers, wellhead connectors, diverters, and related [removed: services.][added: services for floaters, jack-ups and land drilling rigs.]

[removed: OFE offers SPS, including] [added: OFE’s SPS portfolio includes subsea] trees, control systems, manifolds, [removed: connections,] [added: connection systems,] wellheads, specialty connectors & pipes, installation and decommissioning solutions, and related [removed: services.][added: services for Life of Field solutions and well intervention.]

OFE also provides advanced flexible pipe products including risers, flowlines, fluid transfer lines and [added: subsea] jumpers, for [removed: both subsea and FPSO (floating production storage & offloading) based] [added: floating] production [added: facilities] across a range of operating environments.

OFE customers are oil and gas [removed: field developers,] [added: operators,] drilling [added: contractors] and [removed: oil companies] [added: engineering, procurement and construction (EPC) contractors] seeking to undertake new subsea projects, mid-life upgrades and maintenance, well interventions and workover campaigns.

[removed: The key competitive areas in] OFE [removed: are] [added: strives for a leadership position within the 20 Kpsi subsea drilling systems,] large-bore gas fields, deepwater [removed: oilfields] and [added: ultra-deepwater oil and gas] fields [added: and fields] with long tieback distances.

[removed: Turbomachinery] [added: Turbomachinery] & Process [removed: Solutions][added: Solutions]

Baker Hughes Company (Baker Hughes, the Company, we, us, or our) is an energy technology company with a diversified portfolio of technologies and services that span the energy and industrial value chain.

We conduct business in more than 120 countries and employ approximately 68,000 employees.

As of September 16, 2019, GE ceased to hold more than 50% of the voting power of all classes of our outstanding voting stock.

Subsequently, on October 17, 2019, the Company changed its name from Baker Hughes, a GE company to Baker Hughes Company.

On October 18, 2019, the Company began trading as BKR on the New York Stock Exchange.

SEPARATION FROM GE

We did not receive any proceeds from the shares sold by GE and its affiliates.

The Master Agreement Framework focuses on areas where we work most closely with GE on developing leading technology and executing for customers.

First, we defined the parameters for long-term collaboration and partnership with GE on critical rotating equipment technology.

Second, for our digital software and technology business we agreed to maintain the status quo as the exclusive supplier of GE Digital oil and-gas applications, although this commercial arrangement was modified pursuant to the Omnibus Agreement, discussed below, including by rendering the relationship with GE Digital to be nonexclusive with respect to digital offerings in the oil and gas space.

Finally, we reached agreements on a number of other areas including our controls business, pension, taxes, and intercompany services.

All agreements within the Master Agreement Framework were finalized by the first quarter of 2019.

In July 2019, we also entered into an Omnibus Agreement, a general framework agreement that addresses certain outstanding matters under existing long-term commercial agreements between us and GE.

The Omnibus Agreement contains provisions regarding, among other things, (i) the repayment of certain outstanding amounts mutually owed by the parties, (ii) certain employee and assets transfers (including the allocation of costs and expenses associated therewith), and (iii) certain matters related to three international joint ventures.

Modifications to the commercial arrangements between us and GE included, among other things, modification of the relationship between BHGE LLC and GE Digital to be nonexclusive with respect to digital offerings in the oil and gas space.

In September 2019, we completed another secondary public offering in which GE and its affiliates sold 132.3 million shares of our Class A common stock.

The offering included the exchange by GE and its affiliates of LLC Units, together with the corresponding shares of our Class B common stock, for our Class A common stock.

Also, in September 2019, we repurchased 11.9 million shares of our Class B common stock, together with an equal number of associated LLC Units, from GE and its affiliates for $250 million.

In connection with this repurchase, the corresponding shares of Class B common stock and LLC Units were canceled.

As a result of this secondary offering and repurchase, GE's interest in Baker Hughes was reduced to approximately 36.8%, and therefore, GE ceased to hold more than 50% of

Baker Hughes Company 2019 FORM 10-K | 1

the voting power of all classes of our outstanding voting stock.

As of December 31, 2019, GE's interest in us was 36.7%.

We are an energy technology company with a diversified portfolio of technologies and services that span the energy and industrial value chain.

The oil and gas macroeconomic environment continues to be dynamic, and the demand for more energy and the transition to new energy sources is accelerating.

That is why our strategy is focused on improving our core competitiveness and delivering higher-productivity solutions today, while positioning for the energy transition.

| • | Transforming our core through leading product companies: We are focused on delivering more efficient products and services, integrated offerings, and outcome-based solutions to improve total project economics. |

| • | Lead with technology: We are expanding our digital and technology offerings to help facilitate better, safer, and more reliable operations for our customers, while improving our own operational and execution capabilities. |

| • | Lead the energy transition: We are positioning the Company as the leading energy technology company to enable the energy transition. We plan to grow across the gas value chain, and develop products and services to help the industry lower carbon emissions. |

Baker Hughes Company 2019 FORM 10-K | 2

| • | Digital capabilities: We expect to benefit from the emerging demand for artificial intelligence (AI) based solutions as part of our customers’ digital transformation initiatives. Launched in 2019, our partnership with C3.ai will enable us to deliver AI that is faster, easier, and more scalable to drive outcomes for our customers. We will deliver existing technology to oil and gas customers and collaborate on new AI applications specific for oil and gas outcomes. We will also apply these applications internally to improve operational efficiencies. We are also leveraging advanced manufacturing techniques to transform our supply chain and design new parts and components that ultimately will lower costs and operational carbon emissions. |

| • | Energy transition solutions: We are positioned to support our customers' efforts to reduce their carbon footprint with a range of emissions-reduction products. This includes more efficient power generation and compression technology that reduces carbon emissions. We also have a range of inspection and sensor technology that can monitor and help reduce flaring and emissions. |

We recognized orders of $27.0 billion, $23.9 billion and $17.2 billion in 2019, 2018 and 2017, respectively.

We are an energy technology company that has a diverse portfolio of equipment and service capabilities that span the energy and industrial value chain.

OFS also provides integrated well services to plan and execute projects ranging from well construction, intervention, and production services through well abandonment.

Baker Hughes Company 2019 FORM 10-K | 3

The Oilfield Equipment (OFE) segment provides a broad portfolio of mission critical products and services that serve as the last line of defense during drilling and over the life of a field.

The OFE portfolio has solutions for the subsea, offshore surface and onshore operating environments.

Additionally, through Subsea Connect, OFE offers integrated solutions to drive outcomes for customers.

TPS also offers genuine spare parts, system upgrades, conversion solutions, digital advanced services and turnkey solutions to refurbish, rejuvenate and, improve the output from a single machine up to an entire plant.

On July 3, 2017, we closed our business combination (the Transactions) to combine GE O&G and Baker Hughes creating a fullstream oilfield technology provider that has a unique mix of integrated equipment and service capabilities.

The Transactions were treated as a “reverse acquisition” for accounting purposes and, as such, the historical financial statements of the accounting acquirer, GE O&G, are the historical financial statements of the Company.

The historical financial results in the combined financial statements presented may not be indicative of the results that would have been achieved had GE O&G operated as a separate, stand-alone entity during those periods.

As of December 31, 2018, GE held approximately 50.4% of the economic interest and the Company held approximately 49.6% of the economic interest in BHGE LLC.

Although we hold a minority economic interest in BHGE LLC, we conduct and exercise full control over all its activities, without the approval of any other member.

Accordingly, we consolidate the financial results of BHGE LLC and report a noncontrolling interest in our consolidated and combined financial statements for the economic interest in BHGE LLC not held by us.

We are a holding company and have no material assets other than our ownership interest in BHGE LLC and certain intercompany and tax related balances.

BHGE LLC is a Securities and Exchange Commission (SEC) Registrant with separate filing requirements with the SEC and its separate financial information can be obtained from www.sec.gov.

In particular, the Master Agreement Framework contemplates long-term agreements between us and GE on technology, fulfillment and other key areas to provide greater clarity to customers, employees and shareholders.

Secondary Offering and LLC Units Repurchase

If GE's economic interest in BHGE LLC falls below 50%, they would not have a controlling interest.

Any future declines in their ownership would be accounted for by us as equity transactions reducing their noncontrolling interests.

BHGE 2018 FORM 10-K | 1

We are the industry’s only fullstream oilfield services company with an offering that spans the entire oil and gas value chain.

We have developed a comprehensive growth strategy to deliver the productivity improvements the industry needs for the next decade and beyond.

| • | We have market-leading product companies focused on reducing product and service costs, while improving equipment efficiency and reliability to reduce total project spend. |

| • | We strive to create value through integrated offerings by reducing the number of interfaces as we deliver projects and services. This reduces complexity, drives speed, and increases execution efficiency, and |

| • | We plan to continue to develop fullstream opportunities that drive value creation through improvements in total cost reduction and productivity increases for the industry. |

Additionally, managing carbon emissions is an important strategic focus for our business.

BHGE has a long legacy of pushing the boundaries of technology and operating efficiency.

| • | Digital capabilities. We expect to be able to continue to develop software offerings on any operating platform, for new and extended applications in the oil and gas and other industrial ecosystems, such as machine and equipment health, reliability management and maintenance optimization. |

BHGE 2018 FORM 10-K | 2

We believe our strategy coupled with our capabilities will help us compete and win in the current environment, while positioning us for the future.

We are a global business and generate revenue and orders from a combination of equipment sales and services.

In 2018, 40% of revenue was generated from equipment sales and 60% from services, while 42% of orders were for equipment and 58% for services.

In 2017 and 2016, 42% and 47% of revenue was generated from equipment sales, and 58% and 53% of revenue was from services, respectively.

We recognized orders of $23,904 million, $17,159 million, and $11,066 million in 2018, 2017 and 2016, respectively.

Our statement of income (loss) displays sales and costs of sales in accordance with SEC regulations under which “goods” is required to include all sales of tangible products and “services” must include all other sales, including other services activities.

For the amounts shown above, as well as in the orders included in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 in this Form 10-K, we distinguish between “equipment” and “product services,” where product services refers to sales under product services agreements, including sales of both goods (such as spare parts and equipment upgrades) and related services (such as monitoring, maintenance and repairs), which is an important part of its operations.

We refer to “product services” simply as “services” within this Business section and the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 in this Form 10-K.

We are a fullstream provider of oilfield products, services and digital solutions.

BHGE 2018 FORM 10-K | 3

Investment in composite technology is enabling BHGE to extend the capabilities of BHGE’s flexibles even further.

OFE differentiates itself in SPS and deepwater drilling systems.

In addition to a robust presence in other subsea areas, including high-pressure high-temperature (HPHT) fields, OFE’s product lines’ production systems are among the industry’s most reliable, with uptime of the critical control system exceeding 99.8%.

TPS also offers a variety of system upgrades and conversion solutions, from a single machine to full plant debottlenecking and modernization.

TPS differentiates itself from competitors with its expertise in technology and

BHGE 2018 FORM 10-K | 4

The Digital Solutions (DS) segment provides operating technologies helping to improve the health, productivity, and safety of asset intensive industries and enable the Industrial Internet of Things.

DS includes the measurement & controls business for industry-leading hardware technologies as well as our software businesses that leverage best-of-class cloud services, including GE's Predix application development platform.

Legal Proceedings is contained in "Note [removed: 19.][added: 20.]

Commitment and Contingencies" of the Notes to Consolidated [added: and Combined] Financial Statements in Item 8 herein.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Form 10-K][added: Form 10-K]

[removed: \[X\]] [added: | ☑ |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [added: |]

FOR THE FISCAL YEAR ENDED DECEMBER 31, [removed: 2018][added: 2019]

[removed: \[ \]] [added: | ☐ |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) [added: OF THE SECURITIES EXCHANGE ACT OF 1934 |]

[removed: Baker Hughes, a GE company][added: | Baker Hughes Company |]

| [removed: Delaware] [added: Delaware] | | [removed: 81-4403168] [added: 81-4403168] |

| [removed: 17021] [added: 17021] Aldine Westfield [removed: Road, Houston, Texas] [added: Road] | | [removed: 77073-5101] |

Registrant's telephone number, including area code: [removed: (713) 439-8600][added: (713) 439-8600]

| Title of each class | [added: Trading Symbol] | Name of each exchange on which registered |

| Class A Common Stock, $0.0001 Par Value per Share | [added: BKR] | New York Stock Exchange |

[removed: YES \[X\] NO \[ \]][added: Yes ☑ No ☐]

[removed: YES \[ \] NO \[X\]][added: Yes ☐ No ☑]

| Large accelerated filer [removed: þ] | [added: ☑ | |] Accelerated filer [removed: o] | [added: ☐ | |] Non-accelerated filer [removed: o] | [added: ☐ | |] Smaller reporting company [removed: o] | [added: ☐ | |] Emerging growth company [removed: o] | [added: ☐ |]

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter (based on the closing price on June 30, [removed: 2018] [added: 2019] reported by the New York Stock Exchange) was approximately [removed: $12,108,399,000.][added: $9,854,020,448.]

As of February [removed: 8, 2019,] [added: 6, 2020,] the registrant had outstanding [removed: 514,871,270] [added: 653,509,914] shares of Class A Common Stock, $0.0001 par value per share and [removed: 521,543,095] [added: 377,427,884] shares of Class B Common Stock, $0.0001 par value per share.

Portions of Registrant's Definitive Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

[removed: Table] [added: Table] of [removed: Contents][added: Contents]

| | | [removed: Page] [added: Page No.] |

[removed: | | [Part I](#s63CE147283365BFAACDE3F3C26684838) | |][added: PART I]

| [Item [removed: 1.](#sB419967A26E156A1B71BF5C83391462A)] [added: 1.](#s1C5EFCEA816E5129B0B427D1A999422C)] | [removed: [Business](#sB419967A26E156A1B71BF5C83391462A)] [added: [Business](#s1C5EFCEA816E5129B0B427D1A999422C)] | [removed: [1](#sB419967A26E156A1B71BF5C83391462A)] [added: [1](#s1C5EFCEA816E5129B0B427D1A999422C)] |

| [Item [removed: 1A.](#s398446055DB6518F99C3DC5DAA45D910)] [added: 1A.](#s46D21BBB725958838126BFF560A38A3D)] | [Risk [removed: Factors](#s398446055DB6518F99C3DC5DAA45D910)] [added: Factors](#s46D21BBB725958838126BFF560A38A3D)] | [removed: [11](#s398446055DB6518F99C3DC5DAA45D910)] [added: [12](#s46D21BBB725958838126BFF560A38A3D)] |

| [Item [removed: 1B.](#sDE9F228752DE595FB3860723E88C9240)] [added: 1B.](#s2C4FF56D71A75CE3B9599D008CC04449)] | [Unresolved Staff [removed: Comments](#sDE9F228752DE595FB3860723E88C9240)] [added: Comments](#s2C4FF56D71A75CE3B9599D008CC04449)] | [removed: [23](#sDE9F228752DE595FB3860723E88C9240)] [added: [21](#s2C4FF56D71A75CE3B9599D008CC04449)] |

| [Item [removed: 2.](#s4C11A1F0705454E2A0BED1151A3D168C)] [added: 2.](#sF7CD6D652FC85236B5F18DA4758EB649)] | [removed: [Properties](#s4C11A1F0705454E2A0BED1151A3D168C)] [added: [Properties](#sF7CD6D652FC85236B5F18DA4758EB649)] | [removed: [23](#s4C11A1F0705454E2A0BED1151A3D168C)] [added: [21](#sF7CD6D652FC85236B5F18DA4758EB649)] |

| [Item [removed: 3.](#s7EE71BD7B3255F9C8C3AB68AD1465735)] [added: 3.](#sC8E7C3CA083F50AD8CDA407DD9433B91)] | [Legal [removed: Proceedings](#s7EE71BD7B3255F9C8C3AB68AD1465735)] [added: Proceedings](#sC8E7C3CA083F50AD8CDA407DD9433B91)] | [removed: [23](#s7EE71BD7B3255F9C8C3AB68AD1465735)] [added: [21](#sC8E7C3CA083F50AD8CDA407DD9433B91)] |

| [Item [removed: 4.](#s6491DDC107BE5F8591C43C65339D3001)] [added: 4.](#s7723668ED04F5645B782B24E05805445)] | [Mine Safety [removed: Disclosures](#s6491DDC107BE5F8591C43C65339D3001)] [added: Disclosures](#s7723668ED04F5645B782B24E05805445)] | [removed: [23](#s6491DDC107BE5F8591C43C65339D3001)] [added: [21](#s7723668ED04F5645B782B24E05805445)] |

| [Item [removed: 5.](#s5607C1FCA76E5B35BEC726EE2B78B6C3)] [added: 5.](#s0298AA2205C0544C8D31AC07B69B7CC1)] | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s5607C1FCA76E5B35BEC726EE2B78B6C3)] [added: Securities](#s0298AA2205C0544C8D31AC07B69B7CC1)] | [removed: [24](#s5607C1FCA76E5B35BEC726EE2B78B6C3)] [added: [22](#s0298AA2205C0544C8D31AC07B69B7CC1)] |

| [Item [removed: 6.](#s273EB6C145E45B67B6A53A72F2E06C59)] [added: 6.](#s4104C84BD53A50CCBEE09A71062D1A6F)] | [Selected Financial [removed: Data](#s273EB6C145E45B67B6A53A72F2E06C59)] [added: Data](#s4104C84BD53A50CCBEE09A71062D1A6F)] | [removed: [27](#s273EB6C145E45B67B6A53A72F2E06C59)] [added: [25](#s4104C84BD53A50CCBEE09A71062D1A6F)] |

| [Item [removed: 7.](#s68F1C688CB1750DCAA8FF7A7AD3A319D)] [added: 7.](#s4942237D39A95B28898F6C7C54079B71)] | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s68F1C688CB1750DCAA8FF7A7AD3A319D)] [added: Operations](#s4942237D39A95B28898F6C7C54079B71)] | [removed: [29](#s68F1C688CB1750DCAA8FF7A7AD3A319D)] [added: [27](#s4942237D39A95B28898F6C7C54079B71)] |

| [Item [removed: 7A.](#sF63A475F3A3F5432BCBC10FAB16E2965)] [added: 7A.](#sA4CA07BB6E2051B3A8044E198D2D9D68)] | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sF63A475F3A3F5432BCBC10FAB16E2965)] [added: Risk](#sA4CA07BB6E2051B3A8044E198D2D9D68)] | [removed: [47](#sF63A475F3A3F5432BCBC10FAB16E2965)] [added: [43](#sA4CA07BB6E2051B3A8044E198D2D9D68)] |

| [Item [removed: 8.](#sD0AC2C713CEE5CCDA5FAB94FD3B4149F)] [added: 8.](#s505C0175D0D45C86A7B633F433ADA87F)] | [Financial Statements and Supplementary [removed: Data](#sD0AC2C713CEE5CCDA5FAB94FD3B4149F)] [added: Data](#s505C0175D0D45C86A7B633F433ADA87F)] | [removed: [49](#sD0AC2C713CEE5CCDA5FAB94FD3B4149F)] [added: [45](#s505C0175D0D45C86A7B633F433ADA87F)] |

| | [Management's Report on Internal Control Over Financial [removed: Reporting](#s830636ED556751E48E8760DB5507C724)] [added: Reporting](#s31D7FC32778D591E9D01D344C00BE10A)] | [removed: [49](#s830636ED556751E48E8760DB5507C724)] [added: [45](#s31D7FC32778D591E9D01D344C00BE10A)] |

| | [Report of Independent Registered Public Accounting [removed: Firm](#s7B8EB635B4B15B07933BD8929275726B)] [added: Firm](#sE6C74078078B5BBA9BEE20FA427B9C2F)] | [removed: [50](#s7B8EB635B4B15B07933BD8929275726B)] [added: [46](#sE6C74078078B5BBA9BEE20FA427B9C2F)] |

| | [Consolidated and Combined Statements of Income [removed: (Loss)](#sAB996CB7DEDA52B0850E13F4623CA924)] [added: (Loss)](#sCBB226CC00675F49938CD0C5364E8A52)] | [removed: [53](#sAB996CB7DEDA52B0850E13F4623CA924)] [added: [49](#sCBB226CC00675F49938CD0C5364E8A52)] |

| | [Consolidated and Combined Statements of Comprehensive Income [removed: (Loss)](#sCC0505C66B795347B7F6A07CAF1B67B2)] [added: (Loss)](#s1B4AED25A83E5683A72215CBFA3F58E8)] | [removed: [54](#sCC0505C66B795347B7F6A07CAF1B67B2)] [added: [50](#s1B4AED25A83E5683A72215CBFA3F58E8)] |

| | [removed: [Consolidated] [added: [Notes to Consolidated] and Combined [removed: Statements of] Financial [removed: Position](#sD373D7E9C58358E097EECDDB1FA7B3A9)] [added: Statements](#sB9E3DB8027365DDEBB0FD48AA423DC4C)] | [removed: [55](#sD373D7E9C58358E097EECDDB1FA7B3A9)] [added: [54](#sB9E3DB8027365DDEBB0FD48AA423DC4C)] |

| | [Consolidated and Combined Statements of Changes in [removed: Equity](#sDF535A4C2A12540286F4036EA3B5453C)] [added: Equity](#s3F474F3922425049A917BA08B6F86021)] | [removed: [56](#sDF535A4C2A12540286F4036EA3B5453C)] [added: [52](#s3F474F3922425049A917BA08B6F86021)] |

| | [Consolidated and Combined Statements of Cash [removed: Flows](#s3627506688BA5D22A1B1647832591890)] [added: Flows](#sCFC8FD393ABF51F6BFA0F83D578B3985)] | [removed: [57](#s3627506688BA5D22A1B1647832591890)] [added: [53](#sCFC8FD393ABF51F6BFA0F83D578B3985)] |

| [Item [removed: 9.](#sD85CECD79095543C9FC900A7DEECBB33)] [added: 9.](#s3A4BAE6F470E52A6ABED48619D2B346B)] | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#sD85CECD79095543C9FC900A7DEECBB33)] [added: Disclosure](#s3A4BAE6F470E52A6ABED48619D2B346B)] | [removed: [106](#sD85CECD79095543C9FC900A7DEECBB33)] [added: [103](#s3A4BAE6F470E52A6ABED48619D2B346B)] |

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| Houston, | Texas | 77073-5101 |

Yes ☑ No ☐

Yes ☑ No ☐

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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YES ☐ NO ☑

Baker Hughes Company

| | [Part II](#s1EA215DB51E655269EE39320EDE093B7) | |

| | [Consolidated Statements of Financial Position](#s93FE596922CD523D8FF2435957174282) | [51](#s93FE596922CD523D8FF2435957174282) |

| | [Part IV](#s47AFCB4E589F59B48A2BAD89ACF95C11) | |

| | [Signatures](#s1B8023CFB4475867A26B188E91AA70F2) | [111](#s1B8023CFB4475867A26B188E91AA70F2) |

Baker Hughes Company 2019 FORM 10-K | i

10-K 1 fiscalyear2018form10-k.htm 10-K

OF THE SECURITIES EXCHANGE ACT OF 1934

| Class B Common Stock, $0.0001 Par Value per Share | | \- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

\[ \]

| | | | | |

| --- | --- | --- | --- | --- |

| | [Part II](#sC55BF364645D54A3B8A3701D7E79A21B) | |

| | [Notes to Consolidated and Combined Financial Statements](#s05B9BE32694D5F91BDCDE0DA8C3BFECC) | [58](#s05B9BE32694D5F91BDCDE0DA8C3BFECC) |

| | [Part IV](#s7557CAB388FA5B84B4F0EE1EDF3040CC) | |

| | [Signatures](#sC4CD48FD3F445594ABF12655342F5DE3) | [114](#sC4CD48FD3F445594ABF12655342F5DE3) |

BHGE 2018 FORM 10-K | i

The following sets forth the location of our principal owned or leased facilities for our business segments as of December 31, [removed: 2018:][added: 2019:]

| [removed: Oilfield Services:] [added: *Oilfield Services:*] | | Houston, Pasadena, and The Woodlands, Texas; Broken Arrow and Claremore, Oklahoma - all located in the United States; Leduc, Canada; Celle, Germany; Tananger, Norway; Aberdeen, Scotland; Liverpool, England; Macae, Brazil; Singapore, Singapore; Kakinada, India; Nimr, Oman; Abu Dhabi and Dubai, United Arab Emirates; Dhahran, Saudi Arabia; Luanda, Angola; Port Harcourt, Nigeria |

| [removed: Oilfield Equipment:] [added: *Oilfield Equipment:*] | | Houston and Humble, Texas - located in the United States; Montrose, Scotland; Nailsea, England; Niteroi, Brazil; Suzhou, China; Dammam, Saudi Arabia |

| [removed: Turbomachinery] [added: *Turbomachinery] & Process [removed: Solutions:] [added: Solutions:*] | | Deer Park, Texas and Jacksonville, Florida - located in the United States; Florence and Massa, Italy; Le Creusot, France; Coimbatore, India |

| [removed: Digital Solutions:] [added: *Digital Solutions:*] | | Billerica, Massachusetts and Minden, Nevada - located in the United States; Groby, England; Shannon, Ireland; Hurth, Germany |

[removed: PART II][added: PART II]

Baker Hughes Company 2019 FORM 10-K | 21

BHGE 2018 FORM 10-K | 23

Our Class A common stock, $0.0001 par value per share, is traded on the New York Stock Exchange under the ticker symbol [removed: 'BHGE'.][added: 'BKR'.]

As of February [removed: 8, 2019,] [added: 6, 2020,] there were approximately [removed: 6,901] [added: 6,658] stockholders of record.

All of our issued and outstanding Class B common stock, $0.0001 par value per share, is owned by GE and its [removed: affiliates.][added: affiliate.]

The following table contains information about our purchases of Class A common stock equity securities during the fourth quarter of [removed: 2018.][added: 2019.]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

| [removed: Period] [added: Period] | [removed: Total Number of] [added: Total Number of] Shares [removed: Purchased (1)] [added: Purchased (1)] | | | [removed: Average Price Paid Per Share (2)] [added: Average Price Paid Per Share (2)] | | | | [removed: Total] [added: Total] Number [removed: of Shares] [added: of Shares] Purchased [removed: as Part] [added: as Part] of a [removed: Publicly Announced] [added: Publicly Announced] Plan or [removed: Programs (3)] [added: Programs (3)] | | [removed: Maximum] [added: Maximum] Dollar [removed: Value of] [added: Value of] Shares that May Yet [removed: Be Purchased] [added: Be Purchased] Under the Plan or [removed: Programs (3)] [added: Programs (3)] | | |

| November 1-30, [removed: 2018] [added: 2019] | [removed: —] [added: 64,823] | | | [removed: —] [added: 22.61] | | | | — | | $ | 18,690,655 | |

| December 1-31, [removed: 2018] [added: 2019] | [removed: —] [added: 6,300] | | | [removed: —] [added: 23.52] | | | | — | | $ | 18,690,655 | |

| (1) | Represents Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock [removed: units.] [added: units and from the automatic exercise of certain stock options at their expiration.] |

| (2) | Average price paid for Class A common stock purchased from employees to satisfy the tax withholding obligations in connection with the vesting of restricted stock [removed: units.] [added: units and from the automatic exercise of certain stock options at their expiration.] |

[removed: Corporate] [added: Corporate] Performance [removed: Graph][added: Graph]

The first graph below reflects total shareholder returns for Baker Hughes Incorporated (our predecessor issuer pursuant to Rule 12g-3(a) under the Securities Exchange Act) from December 31, [removed: 2013] [added: 2014] to July 3, 2017, the date of consummation of the Transactions.

The second graph below reflects the total shareholder returns for our common stock from July 5, 2017, the first business day following consummation of the Transactions, to December 31, [removed: 2018.][added: 2019.]

[removed: Comparison] [added: Comparison] of [removed: Three] [added: Two] Years and Six Months Cumulative Total [removed: Return][added: Return]

[removed: BHI;] [added: BHI;] S&P 500 Index and S&P 500 Oil and Gas Equipment and Services [removed: Index][added: Index]

[removed: ][added: ]

| | [removed: 2013] | [removed: | | | 2014 |] [added: 2014] | | | [removed: 2015] | [added: 2015] | | | [removed: 2016] | [added: 2016] | | | | [removed: July 3, 2017] [added: July 3, 2017] | | |

[removed: |] [added: BKR;] S&P 500 [added: Index and S&P 500] Oil and Gas Equipment and Services [removed: Index | 100.00 | | | | 92.20 | | | | 74.91 | | | | 98.83 | | | | | 116.03 | | |][added: Index]

The following graph compares the change in cumulative total stockholder return on our common stock (assuming reinvestment of dividends into common stock at the date of payment) with the cumulative total return on the published S&P 500 Stock Index and the cumulative total return on the S&P 500 Oil and Gas Equipment and Services Index over the preceding [removed: 18] [added: 30] month period.

The graph reflects total shareholder returns for [removed: BHGE] [added: our common stock] from July 5, 2017, the first business day following consummation of the Transactions, to December 31, [removed: 2018.][added: 2019.]

[removed: Comparison] [added: Comparison] of [removed: Eighteen] [added: Two Years and Six] Months Cumulative Total [removed: Return][added: Return]

[removed: BHGE; S&P 500 Index and] [added: |] S&P 500 Oil and Gas Equipment and Services Index [added: | | 100.00 | | | | 81.25 | | | | 107.19 | | | | 125.84 | | |]

[removed: ][added: ]

| | | [removed: July 5, 2017] [added: July 5, 2017] | | | | [removed: December] [added: December] 31, [removed: 2017] [added: 2017] | | | | [removed: 2018] [added: 2018] | | | [added: | 2019 | | |]

| S&P 500 [added: Stock] Index | | 100.00 | | | | 110.97 | | | | 106.11 | | | [added: | 139.52 | | |]

| S&P 500 Oil and Gas Equipment and Services Index | | 100.00 | | | | 106.02 | | | | 62.06 | | | [added: | 68.59 | | |]

The comparison of total return on investment (change in year-end stock price plus reinvested dividends) assumes that $100 was invested on December 31, [removed: 2013] [added: 2014] and July 5, 2017, respectively, in BHI and [removed: BHGE] [added: Baker Hughes] common stock, the S&P 500 Index and the S&P 500 Oil and Gas Equipment and Services Index.

The corporate performance graph and related information shall not be deemed "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that [removed: BHGE] [added: Baker Hughes] specifically incorporates it by reference into such filing.

Prior to October 18, 2019, our Class A common stock traded under the ticker symbol ‘BHGE’.

| October 1-31, 2019 | 10,197 | | | $ | 23.31 | | | — | | $ | 18,690,655 | |

| Total | 81,320 | | | $ | 22.76 | | | — | | | | |

| (3) | We did not repurchase any shares of Class A common stock in the fourth quarter of 2019. As of December 31, 2019, the stock repurchase program has been substantially completed. |

Baker Hughes Company 2019 FORM 10-K | 22

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| | | | | | | | | | | | | | | | | |

| Baker Hughes Incorporated (BHI) | | $ | 100.00 | | | $ | 83.26 | | | $ | 118.90 | | | $ | 106.16 | |

| S&P 500 Stock Index | | 100.00 | | | | 101.38 | | | | 113.51 | | | | 124.41 | | |

Baker Hughes Company 2019 FORM 10-K | 23

| | | | | | | | | | | | | | | | | |

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| | | | | | | | | | | | | | | | | |

| Baker Hughes Company (BKR) | | $ | 100.00 | | | $ | 85.84 | | | $ | 59.73 | | | $ | 73.44 | |

Baker Hughes Company 2019 FORM 10-K | 24

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1-31, 2018 | 15,371 | | | $ | 31.49 | | | — | | $ | 563,438,373 | |

| Total | 15,371 | | | $ | 31.49 | | | — | | | | |

| (3) | In November 2017, our board of directors authorized BHGE LLC to repurchase up to $3 billion of its common units from the Company and GE. The proceeds of any repurchase received by BHGE are to be used to repurchase Class A common stock of the Company on the open market. Any repurchase of Class B common stock of the Company, which is paired with repurchased common units owned by GE and its affiliates, would be repurchased by the Company at par value. We did not repurchase any shares of Class A common stock in the fourth quarter of 2018. However, on November 16, 2018, we repurchased and canceled 65 million shares of Class B common stock from GE and its affiliates that is paired with common units of BHGE LLC for $1,461 million. As of December 31, 2018, the stock repurchase program has been substantially completed. |

BHGE 2018 FORM 10-K | 24

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Baker Hughes Incorporated | $ | 100.00 | | | $ | 102.54 | | | $ | 85.37 | | | $ | 121.92 | | | | $ | 108.86 | |

| S&P 500 Index | 100.00 | | | | 113.69 | | | | 115.26 | | | | 129.05 | | | | | 141.44 | | |

BHGE 2018 FORM 10-K | 25

| BHGE | | $ | 100.00 | | | $ | 85.84 | | | $ | 59.73 | |

BHGE 2018 FORM 10-K | 26

| | [removed: Year] [added: Year] Ended December [removed: 31,(1)] [added: 31,(1)] | | | | | | | | | | | | | | |

| [removed: (In] [added: *(In] millions, except per share [removed: amounts)] [added: amounts)*] | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | |

| Revenue | $ | [removed: 22,877] [added: 23,838] | | $ | [removed: 17,179] [added: 22,877] | | $ | [removed: 13,082] [added: 17,179] | | $ | [removed: 16,688] [added: 13,082] | | $ | [removed: 19,191] [added: 16,688] | |

| Cost of revenue | [added: 19,406 | | |] 18,891 | | | 14,143 | | | 10,150 | | | 12,193 | | | [removed: 14,256 | | |]

| Selling, general and administrative | [added: 2,832 | | |] 2,699 | | | 2,535 | | | 1,926 | | | 2,115 | | | [removed: 2,288 | | |]

| Restructuring, impairment and other (2) | [added: 342 | | |] 433 | | | 412 | | | 516 | | | 411 | | | [removed: 189 | | |]

| Goodwill impairment (3) | — | | | — | | | — | | | [removed: 2,080] [added: —] | | | [removed: —] [added: 2,080] | | |

| [removed: Merger] [added: Separation] and [added: merger] related [removed: costs] (4) | [added: 184 | | |] 153 | | | 373 | | | 33 | | | 27 | | | [removed: 67 | | |]

| Operating income (loss) | [added: 1,074 | | |] 701 | | | (284 | | ) | 457 | | | (138 | | ) | [removed: 2,391 | | |]

| Other non operating [removed: income,] [added: income (loss),] net | [added: (84 | | ) |] 202 | | | 80 | | | 3 | | | 100 | | | [removed: 124 | | |]

| Interest expense, net | [removed: (223] [added: (237] | | ) | [removed: (131] [added: (223] | | ) | [removed: (102] [added: (131] | | ) | [removed: (120] [added: (102] | | ) | [removed: (179] [added: (120] | | ) |

| Income (loss) before income taxes and equity in loss of affiliate | [added: 753 | | |] 680 | | | (335 | | ) | 358 | | | (158 | | ) | [removed: 2,336 | | |]

| Equity in loss of affiliate | [removed: (139] [added: —] | | [removed: )] | [removed: (11] [added: (139] | | ) | [removed: —] [added: (11] | | [added: )] | — | | | — | | |

| Income tax provision | [removed: (258] [added: (482] | | ) | [removed: (45] [added: (258] | | ) | [removed: (173] [added: (45] | | ) | [removed: (473] [added: (173] | | ) | [removed: (484] [added: (473] | | ) |

| Net income (loss) | [added: 271 | | |] 283 | | | (391 | | ) | 185 | | | (631 | | ) | [removed: 1,852 | | |]

| Less: Net income (loss) attributable to GE O&G pre-merger | — | | | [added: — | | |] 42 | | | 254 | | | (606 | | ) | [removed: 1,840 | | |]

| Less: Net income (loss) attributable to noncontrolling interests | [added: 143 | | |] 88 | | | (330 | | ) | (69 | | ) | (25 | | ) | [removed: 12 | | |]

| Net income (loss) attributable to Baker [removed: Hughes, a GE company] [added: Hughes Company] | $ | [removed: 195] [added: 128] | | $ | [removed: (103] [added: 195] | [removed: )] | $ | [removed: —] [added: (103] | [added: )] | $ | — | | $ | — | |

| Basic income (loss) per Class A common share | $ | [removed: 0.46] [added: 0.23] | | $ | [removed: (0.24] [added: 0.46] | [removed: )] | [added: $] | [added: (0.24] | [added: )] | | | | | | |

| Diluted income (loss) per Class A common share | [removed: 0.45] [added: 0.23] | | | [removed: (0.24] [added: 0.45] | | [removed: )] | [added: (0.24] | | [added: )] | | | | | | |

| Cash dividend per Class A common share | [removed: 0.72] [added: $] | [added: 0.72] | | [removed: 0.35] [added: $] | [added: 0.72] | | [added: $] | [added: 0.35] | | | | | | | |

| Special dividend per Class A common share | | | | [removed: 17.50] | | | [added: $] | [added: 17.50] | | | | | | | |

| [removed: Cash, cash equivalents] [added: Cash] and [removed: restricted] cash [removed: (5)] [added: equivalents(5)] | $ | [removed: 3,723] [added: 3,249] | | $ | [removed: 7,030] [added: 3,723] | | $ | [removed: 981] [added: 7,030] | | $ | [removed: 1,432] [added: 981] | | $ | [removed: 1,390] [added: 1,432] | |

| Total assets | [added: 53,369 | | |] 52,439 | | | 56,500 | | | 21,466 | | | 23,133 | | | [removed: 26,496 | | |]

| Long-term debt | [added: 6,301 | | |] 6,285 | | | 6,312 | | | 38 | | | 13 | | | [removed: 14 | | |]

| Total equity | [added: 34,499 | | |] 35,013 | | | 38,410 | | | 14,280 | | | 14,545 | | | [removed: 16,386 | | |]

[removed: Notes] [added: Notes] to Selected Financial [removed: Data][added: Data]

| (1) | The [removed: current year] [added: 2019 and 2018] results are not comparable to prior years as the results of [removed: Baker Hughes] [added: BHI] are included only from July 3, 2017. Additionally, we adopted [removed: FASB ASU] [added: Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU)] No. 2014-09, [removed: Revenue] [added: *Revenue] from Contracts with [removed: Customers,] [added: Customers*,] and the related amendments with effect from January 1, [removed: 2016 on a full retrospective basis.] [added: 2016.] Accordingly, [removed: the 2016, 2017 and 2018 fiscal year periods are presented under the new revenue standard and the 2014 and] 2015 [removed: periods are] [added: period is] not presented under the new revenue standard. |

| (2) | See "Note [removed: 20.] [added: 21.] Restructuring, Impairment and Other" of the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion. |

| (3) | In performing the annual impairment test for goodwill in the third quarter of 2015 using data as of July 1 of that year, we determined that a step two test was required for a reporting unit within our OFS operating segment. As a consequence of the continued pressure on oil prices, the revised expected cash flows for this reporting unit resulted in a goodwill impairment charge of $2,080 [removed: million] [added: million.] |

| (4) | See "Note [removed: 3. Business Acquisition] [added: 1. Basis of Presentation] and [removed: Disposition"] [added: Summary] of [added: Significant Accounting Policies " of] the Notes to Consolidated and Combined Financial Statements in Item 8 herein for further discussion of [removed: merger] [added: separation] and [added: merger] related costs. |

| (5) | [removed: Cash, cash equivalents] [added: Cash] and [removed: restricted] cash [added: equivalents] includes [removed: $747] [added: $162] million and [removed: $997] [added: $747] million of cash held on behalf of GE at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively. |

Baker Hughes Company 2019 FORM 10-K | 25

Baker Hughes Company 2019 FORM 10-K | 26

BHGE 2018 FORM 10-K | 27

BHGE 2018 FORM 10-K | 28

[removed: Management's] [added: Management's] Report on Internal Control Over Financial [removed: Reporting][added: Reporting]

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting based on the 2013 framework in [removed: Internal] [added: *Internal] Control - Integrated [removed: Framework] [added: Framework*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our assessment, our principal executive officer and principal financial officer concluded that our internal control over financial reporting was effective as of December 31, [removed: 2018.][added: 2019.]

| /s/ LORENZO SIMONELLI Lorenzo Simonelli Chairman, President and Chief Executive Officer | | /s/ BRIAN WORRELL Brian Worrell Chief Financial Officer | | /s/ KURT CAMILLERI Kurt Camilleri [added: Senior] Vice President, Controller and Chief Accounting Officer |

[removed: REPORT] [added: REPORT] OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

Baker [removed: Hughes, a GE company:][added: Hughes Company:]

[removed: Opinion] [added: *Opinion] on the Consolidated and Combined Financial [removed: Statements][added: Statements*]

We have audited the accompanying consolidated [removed: and combined statement] [added: statements] of financial position of Baker [removed: Hughes, a GE company] [added: Hughes Company] and subsidiaries (the [removed: "Company")] [added: Company)] as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated and combined statements of income (loss), comprehensive income (loss), changes in equity, and cash flows for each of the years in the [removed: two-year] [added: three-year] period ended December 31, [removed: 2018,] [added: 2019,] and the related notes (collectively, the [removed: "consolidated] [added: consolidated] and combined financial [removed: statements").][added: statements).]

In our opinion, the consolidated and combined financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] and the results of its operations and its cash flows for each of the years in the [removed: two-year] [added: three-year] period ended December 31, [removed: 2018,] [added: 2019,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: ("PCAOB"),] [added: (PCAOB),] the Company’s internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February [removed: 19, 2019] [added: 13, 2020,] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

[removed: Basis] [added: *Basis] for [removed: Opinion][added: Opinion*]

[removed: REPORT] [added: REPORT] OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

[removed: Opinion] [added: *Opinion] on Internal Control Over Financial [removed: Reporting][added: Reporting*]

We have audited Baker [removed: Hughes, a GE company] [added: Hughes Company] and subsidiaries’ (the [removed: "Company")] [added: Company)] internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] based on criteria established in [removed: Internal] [added: *Internal] Control - Integrated Framework [removed: (2013)] [added: (2013)*] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: ("PCAOB"),] [added: (PCAOB),] the consolidated [removed: and combined statement] [added: statements] of financial position of the Company as of December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] the related consolidated and combined statements of income (loss), comprehensive income (loss), changes in equity, and cash flows for each of the years in the [removed: two-year] [added: three-year] period ended December 31, [removed: 2018,] [added: 2019,] and the related notes (collectively, the [removed: "consolidated] [added: consolidated] and combined financial [removed: statements"),] [added: statements),] and our report dated February [removed: 19, 2019,] [added: 13, 2020,] expressed an unqualified opinion on those consolidated and combined financial statements.

[removed: Definition] [added: *Definition] and Limitations of Internal Control Over Financial [removed: Reporting][added: Reporting*]

[removed: BAKER HUGHES, A GE COMPANY][added: Baker Hughes Company:]

[removed: CONSOLIDATED] [added: CONSOLIDATED] AND COMBINED STATEMENTS OF INCOME [removed: (LOSS)][added: (LOSS)]

| | [removed: Year] [added: Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | |

| [removed: (In] [added: *(In] millions, except per share [removed: amounts)] [added: amounts)*] | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | |

| Sales of goods | $ | [removed: 13,113] [added: 13,689] | | $ | [removed: 11,062] [added: 13,113] | | $ | [removed: 9,462] [added: 11,062] | |

| Sales of services | [removed: 9,764] [added: 10,149] | | | [removed: 6,117] [added: 9,764] | | | [removed: 3,620] [added: 6,117] | | |

| Total revenue | [removed: 22,877] [added: 23,838] | | | [removed: 17,179] [added: 22,877] | | | [removed: 13,082] [added: 17,179] | | |

| Cost of goods sold | [removed: 11,524] [added: 11,798] | | | [removed: 9,486] [added: 11,524] | | | [removed: 7,829] [added: 9,486] | | |

| Cost of services sold | [removed: 7,367] [added: 7,608] | | | [removed: 4,657] [added: 7,367] | | | [removed: 2,321] [added: 4,657] | | |

| Selling, general and administrative [removed: expenses] | [removed: 2,699] [added: 2,832] | | | [removed: 2,535] [added: 2,699] | | | [removed: 1,926] [added: 2,535] | | |

| Restructuring, impairment and other | [removed: 433] [added: 342] | | | [removed: 412] [added: 433] | | | [removed: 516] [added: 412] | | |

| [removed: Merger] [added: Separation] and [added: merger] related [removed: costs] | [removed: 153] [added: 184] | | | [removed: 373] [added: 153] | | | [removed: 33] [added: 373] | | |

| Total costs and expenses | [removed: 22,176] [added: 22,764] | | | [removed: 17,463] [added: 22,176] | | | [removed: 12,625] [added: 17,463] | | |

| Operating income (loss) | [removed: 701] [added: 1,074] | | | [removed: (284] [added: 701] | | [removed: )] | [removed: 457] [added: (284] | | [added: )] |

| Other non operating income, net | [removed: 202] [added: (84] | | [added: )] | [removed: 80] [added: 202] | | | [removed: 3] [added: 80] | | |

| Interest expense, net | [removed: (223] [added: (237] | | ) | [removed: (131] [added: (223] | | ) | [removed: (102] [added: (131] | | ) |