Baker Hughes Angola. Advancing Reservoir Performance

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1 Baker Hughes Angola Advancing Reservoir Performance

2 Baker Hughes Angola Baker Hughes has been providing advanced oilfield products and services to the Angolan petroleum industry for over 30 years. We have helped Sonangol and its international operator partners cut costs, maximize production and improve ultimate reserve recovery from their fields, regardless of the technical or operational challenges. Our Vision Baker Hughes Angola will be a leading partner in the Angolan petroleum Industry through the delivery of superior service and results that add value to our customers business. By becoming a preferred community partner in Angola, we will build key business relationships while making long-term investments and focusing on our national content efforts. The critical success factors for achieving the Baker Hughes Angola vision will be: Customer Create value by delivering exceptional wellsite performance and results Engage as a strategic partner People Ensure that the Angolan team has the required trained, experienced personnel to deliver our technology and services to meet the client s expectations Create an environment in which people are highly engaged and motivated Process Drive continuous improvement in our support processes, facilities and supplier relationships to optimize business performance Results Deliver profits to our shareholders, Grow market share Be completely compliant C2 Process Results HSE People Customer Health, Safety and the Environment Baker Hughes is a responsible corporate citizen committed to the health and safety of people and the protection of the environment. It is the company s policy to conduct business activities in a manner that does not harm people or the environment. We require all employees to fully comply with this policy and all HS&E standards and regulations. We firmly believe that this commitment adds value to our customers, employees and shareholders. Through promoting applicable laws, regulation and policies, the Baker Hughes global HS&E organization and every BHI employee is tasked with the responsibility of working to ensure the safety of all our employees, customers and communities Baker Hughes Angola HS&E Performance MR Quarter BHI (TRIR) BHI (DAFWCR) BHI in Angola (TRIR) BHI in Angola (DAFWCR) 2

3 Today, Baker Hughes has a strong and growing presence in Angola. The map below shows that Baker Hughes provides services to most of the offshore blocks in Angola. Block 14 Block 0 Baker Hughes employees are expected to be honest, trustworthy, respectful and ethical in all ways. The Baker Hughes Business Code of Conduct governs our business decisions and actions. The integrity, reputation and profitability of Baker Hughes ultimately depend upon the individual actions of our employees and representatives. Each employee is personally responsible and accountable for compliance with our Code of Conduct. Block 31 Block 15 Block 3 Baker Hughes is committed to continuously improving its Angolan national content through three cornerstones: workforce, suppliers and community. Baker Hughes Angolan Content cornerstones Block 32 Block 18 Workforce Providing the technology advancements and operational excellence necessary to recover Angola s vast hydrocarbon resources is only part of Baker Hughes commitment to Angola. Equally important is our pledge to drive the local economy and contribute to social programs designed to improve the quality of life for Angolans. Social and economic programs to benefit Angola are at the center of Baker Hughes long-term business plan. As Baker Hughes operations grow in Angola, the company is more dedicated than ever to recruiting and training an Angolan workforce as well as partnering with local companies, government ministries and educational institutions to help drive Angola s economic strength in the global community. The Baker Hughes Core Values of Integrity, Performance, Teamwork and Learning are an everyday reminder of the high standards expected of each employee from the chief executive officer to technicians in the field. Baker Hughes is dedicated to being a superior corporate citizen in countries around the world. Suppliers Angolan added value Community To meet that goal, Baker Hughes is establishing a measurement metric, NaCETS or National Content Expenditure Tracking System, dedicated to monitoring our performance in national content development, that impact value creation. The monitoring system includes a structured communications plan designed to detail progress quarterly to all stakeholders, including government ministries, Sonangol, international oil companies, employees, foreign embassies and educational institutes. Angolan Content Measurement Total expenditure on Angola labor Total Angolan man hours Employee training costs Total expenditure on Angola goods and services Baker Hughes is committed to a culture of complete compliance, which starts with our Core Value of integrity the foundation of our individual and corporate actions. Workforce Suppliers Community Total capital investment in Angolan assets Contribution to education National content means our commitment to create value in the Countries where we operate, in compliance with our Core Values The plan is to develop a quarterly Baker Hughes Angola national content report and to hold bi-annual meetings with our stakeholders to get their engagement and feedback on our initiatives. 3

4 The Baker Hughes Dubai training center provides state-of-the-art classrooms and equipment to train employees and customers. Workforce Development Baker Hughes employs over 460 people at four locations in Angola: Luanda, Sonils (Port of Luanda), Soyo and Malongo/Cabinda. Currently, 71 percent of our workforce is Angolan and we plan to increase that number to 75 percent by the fourth quarter of 2010, including appointing Angolans to senior management and executive positions. All positions in the organization will be attainable by local employees, based on their demonstrated aptitude and performance. Hiring additional local staff is just part of Baker Hughes commitment. We have established a strong training program that focuses on each individual s needs and goals for advancement. The objective of the training program is to deliver a competent, motivated workforce to provide the Angola petroleum industry the highest level of service and support as well as quality products in the safest possible environment. The ultimate goal of a strong employee training and advancement program is to achieve a 92 percent retention rate among our local staff. over 500 scientists and engineers are working to solve the industry s future challenges. Baker Hughes completed its Dubai headquarters and education center in 2008, significantly improving operations support and training capabilities in the eastern hemisphere. Baker Hughes Angola also will use the training facility in Dubai for customer training on new technology and techniques planned for deployment in Angola. The recruiting and training plan is ambitious; however, based on the processes in place to recruit, train and provide future opportunities for Angola employees, we are confident we can reach our goal of maximizing our local workforce development. Baker Hughes Angola plans to recruit 53 Angolans in We are continuing to search for and find technically competent people with the skill sets and the motivation to learn more about our industry. Recruitment of Angolans The Baker Hughes training program centers on both individual and organizational learning and development, including English language classes, administrative, HS&E and technical training. Baker Hughes dedicates nearly $1 million per year to training its Angola staff at the Dubai and Houston Technology Centers. The Center for Technology Innovation, or CTI, in Houston opened in 2008 and Year Personnel

5 Community Investment The Baker Hughes commitment to Angola s people does not stop at recruiting and training employees. The company is committed to furthering the local economy and social structure through community investments. In 2008 the Baker Hughes Foundation launched the Baker Hughes Scholars Program, providing grants to local undergraduate students committed to furthering their education to drive Angola s economic development. Eighty-four percent of the students in the program are the first in their families to pursue higher education. Angolan undergraduates celebrate receiving their bursary awards with Baker Hughes staff in April 2009 The $1.5 million investment in the Baker Hughes Scholars Program supports 86 Angolan students pursuing degrees in engineering, geology and geophysics and various business related fields at eight different Angola universities. Each student receives the grant through graduation, providing they remain in good academic standing. The scholarship program, administered by the prestigious Institute of International Education, is the first for Baker Hughes anywhere in the world, demonstrating our commitment to the future of Angola. Baker Hughes will continue to sustain the Scholar Program in Angola. Our commitment in Angola is mirrored in other countries around the world. In a recent Management & Excellence benchmark study comparing oilfield service companies sustainability programs, Baker Hughes ranked second in the world. The company improved from a 47.8 percent score in 2008 to 72.7 percent in 2009, indicating Baker Hughes singular focus to expand its role as a business and social partner in countries like Angola. The study included 355 criteria such as sustainability, corporate governance, social responsibility, transparency and ethics. Education is just one aspect of community involvement. Baker Hughes employees also distribute food and other consumables to the Cluny Orphanage in Soyo, Angola, every six months. 5

6 Expanding Infrastructure Baker Hughes currently operates in three regions in Angola: Luanda, Soyo and Cabinda. In 1999 Baker Hughes transferred its operations to a purpose-built facility in the Sonils Oil Service Center in Luanda. This facility serves as the primary base of operations for all Baker Hughes product lines and the Angola leadership team. Soyo and Cabinda serve as operations centers. In Baker Hughes will invest over $80 million in capital projects in all of these regions, bringing new business to the local communities while enhancing our ability to support operators in Angola. The infrastructure expansion projects constitute one of the largest single investment programs in any country by Baker Hughes in , demonstrating the firm s commitment to Angola. These expenditures will include: A $29 million investment in new staff housing in Luanda by the first quarter of 2010 Construction of a $22 million new operations facility at the Sonils base, targeted to open by March 2010 A $14 million investment over two years to build a new service facility in Malongo/Cabinda A $7.4 million investment to redevelop the Sonils Luanda operations base, including establishing a BEACON remote collaboration center A $4 million expenditure over two years to build a bulk storage and mixing facility in Sonils A new $3 million downtown headquarters for the Baker Hughes Angola leadership team A $2 million upgrade to the Soyo drilling service facility A $1.1 million expansion of the existing production chemicals blending plant in Soyo operated by Baker Petrolite Angola Ltd., a joint venture with Vernon Angola Services Inc; the facility expansion will double the joint venture s in-country capacity A new $3 million downtown headquarters for the Baker Hughes Angola leadership team. 6

7 Supplier Development Baker Hughes recognizes the importance of partnering with local Angolan suppliers to conduct our business and drive the local economy. We will procure goods and services from local business and service providers wherever and whenever possible with no compromise in quality, delivery, schedule or costs. Baker Hughes tenders for local goods and services include appropriate clauses binding vendors to similar principles of national content to their suppliers and subcontractors. Baker Hughes has a rigorous procedure for supplier selection and monitoring, ensuring each supplier has the capability to meet the necessary business requirements. We have developed contract and procurement procedures that ensure local companies are treated equitably in the bid process and we work closely with suppliers to make certain they are aware of Baker Hughes future work commitments and can provide the necessary capacity. Baker Hughes is currently running a joint venture that operates in Angola as Baker Petrolite Angola Limited (BPAL), a joint liability entity with ownership split between Baker Petrolite and Vernon Angola Services Inc. This joint venture has strengthened our position in Angola and will provide stability for long-term growth in the area. The BPAL organization currently numbers in excess of 80 personnel, of whom 56 are Angolan nationals (68%). All Angolan employees have contracts directly with BPAL. Five Angolans are in management positions. A significant investment is planned within the new Baker Hughes facility in Luanda. This will provide a second storage and blending location and will effectively double our in-country capability. Where local support services are insufficient to meet Baker Hughes business requirements, district business plans include a program to support the development of third party services. Baker Hughes operations promote sustainable development of local services in those areas that support our operations, including the development of people, support services and their associated infrastructure. 7

8 Baker Hughes Angola Rua Eduardo Mondlane # 1 Luanda Republica de Angola Tel Fax Baker Hughes Incorporated. All Rights Reserved. COR