Good morning, welcome to the first session of Bernstein 42nd Annual Strategic Decisions Conference. My name is Bob Brackett. I'm co-head of Energy and Transition for Bernstein, as well as Global Metals and Mining. This room, I encourage you to stay in. We'll have the majority of the S&P energy coming through this room starting now and moving through all the way to Friday. This is room energy. We are not expecting a fire drill or any sort of drill, and so if the alarms ring, please take it seriously.
Your primary exit will be out the back of the room to the right, down to the escalator area where you came up. If for any reason that is blocked, there are internal stairways just straight out of the room marked with exit signs. Ultimately, this is your conversation. This is a fireside chat. Scattered across the room, you'll find these blue cards. There's QR codes that will take you to an app where you can enter your questions. In theory, you could ask questions out loud as well. Before we get to your questions, we'll start first by introducing and welcoming Lorenzo Simonelli, the Chairman and Chief Executive Officer of Baker Hughes.
We'll have a fireside chat. If you've spent time with me in the past, I normally follow a pyramid principle. I start with sort of high-level macro issues, then we dig into strategy and then move into operations, financial strategy, et cetera. Do it a little differently today. Lorenzo and Baker have been coming to SDC for many years now, typically doing one-on-one meetings. They've generously offered a fireside chat, we'll start by talking broadly about the company.
We'll definitely bring up the Strait of Hormuz for those that are here to hear about that, and then we'll start to talk about the various business lines. With that, I thank you, I thank Lorenzo, and we'll begin. We'll begin, Lorenzo. Effectively, today's Baker Hughes is a new Baker Hughes. Roughly a decade old. Already been through two $100-dollar cycles, one mid-$50 cycle, one negative cycle. Who is Baker Hughes today versus who you were 10 years ago?
Well, Bob, thank you very much and it's great to be here today. It's funny when you look at 10 years, but you hear the name Baker Hughes, and it is a name that is synonymous in the oil and gas industry for over 100 years. Today, the Baker Hughes is very different than what it was. During the course of the 10 years, we fundamentally transitioned the company and transformed it into becoming much more of an expansive area of capability for the energy cycle. I break it down into a few areas. As you look at the first five years, from 2017 to 2022, we had a number of the cycles. We were obviously going through a separation from what was at the time General Electric, and in fact, that completed at the end of 2019.
That gave us a lot of time to go through the roller coasters and decide what is the right pathway for Baker Hughes going forward. In 2022, we launched a three-horizon view of how we were going to transform Baker Hughes into really an industrialized energy solutions company. Merging the capabilities that we see as critical in providing the energy sources for industrial applications and for the growth that's happening within industries. From 2022 to 2025 was Horizon One, and year on year, we improved profitability by really focusing on the fundamentals of operational efficiency. Also streamlining some of our processes, focusing on cleaning up some of the portfolio, as well as focusing the team very much on factors that we could control.
I'm pleased to say that by the end of 2025, we increased margins by over 300 basis points and nearly doubled EBITDA. Really that set us onto the pathway of Horizon Two, which again, we started at the beginning of this year, which is really continuing to advance the aspect of industrialized energy solutions as a company. That means a lot more of the portfolio being applicable to not just the extraction and the aspect of production of oil and gas, but also the enhancement of all types of molecules and monetization of those molecules for industrial applications. When you think of nitrogen, you think of oxygen, you think of LNG, and we see the molecule aspect very important to Baker Hughes.
Geothermal, as we go through CCUS, it's management of this as we look to provide more energy to the world, lower emissions, and also productivity to our customers. Baker Hughes today is not your typical Oilfield Services & Equipment company. It's very different than what it used to be. The name is being changed in very much the last five years and a path going forward to continue to change it as well. It culminated with the announcement last July of the Chart acquisition as well, which further moves us into the industrialized areas and really decreases some of the exposure to the volatility of the oil and gas space.
In the past, there were three dominant oil service companies, and you'd say, "Oh, they've got different colors on their trucks, and that's how they're differentiated." I'm simplifying a bit. How are you differentiated now? Who is your peer set? It's Baker X and Y. How would you answer that question?
Number one, we changed our color from before because we were also synonymous with this red, blue, and we actually decided to change the branding of Baker Hughes, and it's an evolution that's happened over time. The way in which we're structured, though, is we do have an Oilfield Services & Equipment segment. What differentiates, though, our Oilfield Services & Equipment business versus some of the traditional peers such as SLB or Halliburton that you reference as different colors is, number one, we're 75% international. Also, we're 50% offshore, and we're much more production-focused. We have less exposure to the upstream cycles, and that's something that we enjoy from the production chemicals, the artificial lift element. It's an ongoing OpEx that takes place within the industry of the extraction.
You have your segment of Oilfield Services & Equipment, and then you have this Industrial & Energy Technology segment, which again is very much different than the peer group of oilfield services. It has turbines, it has pumps, it has valves, it has compressors, it has condition monitoring, digital applications. It's synonymous with being able to provide power generation. It's synonymous with liquefaction of natural gas, geothermal, CCUS, hydrogen, looking at industrial applications, also downstream, midstream, as well as then industrial applications as you go to offsite, off-grid data centers, and that's a space that obviously is continuing to grow significantly. When you look at the mix today, we're about 50/50 and we've got a portion of the business still obviously in oil and gas, but we've got a number of end markets that are differentiated than our traditional Oilfield Services & Equipment peers.
In a former life, I was a strategic planner, one of my complaints about strategy is people will always bring you more and more ideas, new ideas, let's try this. I eventually just defined strategy as telling me what you will not do as opposed to what you could do or want to do or might do. What will Baker not do strategically?
Yeah, we're very much focused on, again, the value chain where we have technology differentiation and we have competence. At the heart of it, we are a technology company that is intrinsic with the ability to extract and monetize a molecule for our customers. We are not going to be an E&P. We are not looking to compete with our customers. We're not looking to be an operator. We're not looking to go into those spaces. Where we're looking to do is enable the connectivity between the energy sources and the industrial outcomes. What that means is you're essentially being able to link the subsurface to the top side and then the movement of that molecule into a value creation for the customer as well. When you look at energy sources and industrial outcomes, they're becoming much more interlinked. You look at today, data centers.
They're increasingly coming and saying, how do I get the power? Where do I get the power from? You got to have a knowledge of where the natural gas is coming from, how competitive is the natural gas, how you get it to the data center. Is it on grid? Is it off grid? This technical competence is something that we look to be prominent in. What we're not going to do is go outside of the space where we have technical relevance, and we're not looking to go into wind turbines. There's plenty of people doing wind turbines. We're not looking to do solar panels. We're not looking to go into nuclear reactors. We're going to stay very much focused on where we can add the value chain with technology across bringing the molecule, and that molecule is not just a hydrocarbon. It's more and more helium, oxygen.
You look at natural gas relative to also space. One of the things that's happening in the space sector, where there's a huge requirement for propellant and people needing to produce this propellant. That's where we, in managing the molecule, have a significant advantage across the value chain because of the portfolio that we have, and we're able to match up with the end customer needs and give them the outcome.
I like the terminology around managing the molecule. You also manage electrons.
Oh, yes.
There's something around. Where you are in power solutions, you're content in. If I push back, why not nuclear? You're turbine experts.
We.
Uranium's a molecule.
Yes. First of all, there are areas that are already very competitive with regards to the aspect of dealing with uranium. We are providing applications that are technical in nature to the nuclear space. Do we need to be in a nuclear power station? No. We can provide the valves that are necessary. We can provide the critical technical competence that we have. Exposure into the uranium field and the aspect of potential consequences from radiation, et cetera, we've always stayed away from. Again, there's plenty of other people that know how to do that well, and we stay in the fields where we're competent. Your point around doing a lot with electrons, we are very much molecule to electron. That's a key aspect of what we're delivering to data centers as well, which is obviously seeing significant growth, and I'm sure we'll talk about.
If I think about your evolution, oil and gas upstream CapEx globally is somewhere in between, call it half a trillion dollars a year. Maybe $600 billion. Data center CapEx and power solutions for data center CapEx are comparable number, a little smaller if you just look at the data center power requirements, and you're sort of 50-50 a foot in each. Where are you in the future? Are you going to stay at roughly the top three in, say, oil services on the oil and gas CapEx side? What's the evolution look like? Do you always stay where you are balanced?
I think over time, and we've depicted this also in the way in which Baker Hughes is evolving, from a percentage of the mix of Baker Hughes. We will continue to expand on the industrial side and continue to decrease on the cyclical side. That doesn't mean from a dollar value it goes down. It's the growth that's taking place in the company overall, and it's because the end markets are growing significantly, and they allow us to change that mix orientation of the company. When you look at the last few years, you're already seeing it with the expansion that we've had in Industrial & Energy Technology.
We're going to get to the Strait of Hormuz now.
Okay.
We're going to talk about macro, and we're going to walk through the big three macro levers. If we could start with the oil side. One, you have employees in the region. You have customers in the region. You've got insights there. Where are we in the very short term geopolitical conflict around the Strait? I'll come back, and we'll talk about some of the sort of longer-term implications.
I think, like everybody else, I read the newspapers, and I don't have any inside scoop. We are obviously waiting to see if the Straits of Hormuz can be reopened through the negotiations that are happening. First and foremost, for us, it's the safety of the employees that we have. We have considerable employees at different locations within the region. I personally have been out there a few times to make sure that they're well, and also to make sure that we ensure business continuity for our customers. That's paramount for us, and I can say that activity is ongoing, and we're working very well with our customers to ensure the safety as well as business continuity. As you look at longer term, clearly the Straits of Hormuz being closed is going to be a burden for the global economy.
The longer that it continues to be constrained, it's constraining the output of available barrels to the world at large. It's not just available barrels of oil. It's the subsequent downstream effect of fertilizers and subsequent other products that are also going to have an impact. Likewise, helium, et cetera. I think it's a much broader aspect than just oil. It's going to be seen in other additives as well as we go downstream. I can just hope, like everybody, that the Straits of Hormuz open quickly because the longer they are closed, the more it will have an impact downstream later on from a recovery perspective.
Longer term, I've been arguing for a couple of years now that onshore U.S. shale oil business is fairly mature. You're starting to see signs from your customers of ultimately having to look abroad, right? Shale, by definition, it's a finite resource. It's held remarkably flat at roughly 10 million barrels a day for years now, and we haven't really been able to find the next play, the next growth play, frankly, or the desire for upstream companies to go out and commit the capital to do that. Now you're starting to see license rounds in Libya reasonably well. You're starting to see offshore. You're starting to see BLM New Mexico land deals that look like billion-dollar deals for small parcels of land. There is a sense in the planning departments of your clients that five to 10 years out, they've got to be thinking about something else.
You could have argued that international CapEx is going to start to win again. Now you've got the geopolitics. Are we entering, and this is probably the number one debate we've been having with some of our clients. Is there an international CapEx cycle coming for upstream? Is that how we solve ultimately the risk around the Strait of Hormuz?
I think the aftermath of this is going to be an increase in investments across multiple areas, upstream being one. Also as you look at the infrastructure to look at the resilience of being able to get the molecules to the marketplace. When you think about new countries, as you mentioned, Libya. You're looking at activity increasing in Nigeria. You're looking at other locations in Africa. You see what's happening in Alaska. I don't think the U.S. is finished either. I think technology advancements continue to be there. I would say the first mover are going to be some of the shorter cycle barrels available within North America. Then longer term, clearly the international upstream is going to continue to increase as well, and that's where there's more molecules available. I look at infrastructure as being critically important as well.
When you think about the aspect of diversification for energy security. That's going to be a key element, and it's one of the elements where we play is being able to build incremental infrastructure. You have pipelines that are going to be necessary in the Middle East to bypass the Strait of Hormuz. You've got new plants that are going to be required from a perspective of LNG to be able to not just be located in one single location. All of this actually is a positive tailwind as you look forward beyond what is this current situation, where we see incremental opportunity for a company like ours within the infrastructure build, both from the upstream side, but also across all of the infrastructure that's going to be needed.
I think what's clear is prominent in everybody's mind is energy security and being able to have energy security from an affordability perspective and obviously then sustainability. Energy security is what we're hearing a lot about.
We've talked about oil, 20% roughly of the world's oil moves through the Strait of Hormuz. LNG is a comparable number. With LNG, you've had physical damage or attacks on the Qatari facilities. I remember when those headlines came out, there was these sort of funny headlines where you got the QatarEnergy LNG CEO talks about 17% of capacity being offline for three to five years. You sort of at first you're like, well, 17, that's an awfully precise number." Oh, it's one over six. Right. Okay, understood that. Three to five years, or you can build a new LNG facility in three to four years, and these are the Qataris, they can do it faster. When you peel that onion, the answer is there's just no turbines at that scale. There is a long queue. Talk about the evolution of LNG specifically.
If you were QatarEnergy LNG, what can you do in order to get a turbine other than, I guess, beg you and kick somebody out of the queue? What can be done? Ultimately, does this mean we see a wave of what would have been sort of lower quality or riskier LNG projects? I think of the Mozambiques of the world and maybe the Papua New Guineas and maybe the West Africas. Do we just start to see diverse LNG opportunities as opposed to the best opportunities start to win?
We've always been of a positive view on LNG. We think natural gas for the future is the clear winner. LNG is also the clear winner relative to providing energy security because it is abundantly available in multiple locations. We know how to liquefy, then it can be transported. Specifically on Qatar, I'll let QatarEnergy speak for themselves. The aspect of ongoing projects is moving forward. If you look at their expansion plans, they are staying committed to their expansion plans. The reality is that supply chain is constrained when you need something today on a facility that's potentially been impacted from the conflict. Those particular trains need to be repaired or need to be changed, and that's why the timeline being given of the three to five years.
Likewise, though, at the same time, they're continuing with the developments that they've been progressing with. If you look at North Field West, you look at North Field East. They're also continuing their expansion plans. You are seeing other locations come into the fold. I think everybody's seen Argentina. Again, we know Argentina is plentiful of gas. We know Algeria is plentiful of gas. We know also the U.S. has a lot of gas, and you've got a lot of U.S. Gulf Coast projects that are looking to move forward and, again, on a fast track with the approval. We see that there's going to be a significant increase in LNG, and we've always said that LNG, by 2030, you needed 800 million tons per annum of installed capacity. We see by 2035, 950 million tons of needed capacity.
We're still very much of that view, and it's going to be one of the key elements to provide that energy security. We are bullish around LNG, and we think it will be more diversified, including Mozambique, and you've got already floaters that are taking place in Mozambique with one of the operators. You've got one of the land operators onshore. You've got the ExxonMobil project that is being looked at. There's plenty of locations, and I don't think it's necessarily more risky because the U.S. also is very much looked at as a safe haven for investment.
Yep. That LNG business sits within, we'll limit the acronyms, but IET, Industrial & Energy Technology.
Industrial Energy Technology.
It is the minority of Industrial & Energy Technology, the majority of which are things related to data centers. We have an investor question, how much of Industrial Energy segment supplies data centers? What's the growth rate of demand for those customers? Talk about that segment.
Yes, I think if we were here a few years ago, a lot of people would have said Baker Hughes, Oilfield Services, Equipment, LNG. As we've shown through the results and also what we've indicated before, Baker Hughes' portfolio is very varied, and the end markets in which we can play are very varied, which is one of the key attributes and strengths of the Baker Hughes portfolio. You just picked on that because if you look at LNG, if you look at 2025, and you look also at first quarter, less than 15% of the order intake, 85% of IET is outside of LNG. When you think about the power generation, you think about the onshore-offshore applications, you think about the pipeline applications.
Specifically on data centers, again, when we look at data centers, you look at the first quarter, we did in power systems overall, $1.4 billion. 1 billion of that was in data centers. In 2025, we did $1 billion in data centers. We set out a target initially of $3 billion between 2025 and 2027. We said in our last earnings call that we were going to be revising that up because, again, the intake is significant. Much broader than data centers is the whole aspect of power generation, which is a significant element of the Industrial & Energy Technology segment.
Did I hear a growth rate in there?
No, because Chase won't let me say that.
If I think about delivering power solutions to AI data centers, who seem the hungriest, but it's a general problem. There are solutions that are fast and slow. There's a spectrum there, and there are solutions that are bad and good. I would put nuclear in the slow but good category. We could debate that. Are there any fast and good solutions to AI data center power demand that you offer?
I think what's true today is that the marketplace is hungry for any type of quick power. That will resolve itself with what's most appropriate, what's most economical, and what's most efficient. When you look at the turbines that we provide, you look at the generators that we provide, they are applicable in this sweet spot of the 150-300-megawatt range between the NovaLT16, the Frame 5, also with the BRUSH generator that we provide. We think, and again, we've seen it from the efficiencies perspective, we've seen it from the emissions standpoint, that this is an area that's going to be continuous. As you look at some of the offerings today, you've got a string of 100 different units. That's complicated to manage over time. Clearly today, there's a lot of different offerings.
We have developed these turbines not just for data centers. We knew data center was one of the end markets. We've developed it for multiple end markets, inclusive of pipelines and industrial sites. This is a very sweet spot for off-grid immediate power. We think that, again, the grid will take time. This isn't a one-year event. This is a multi-year. It will take time for all the other solutions to come on stream. Eventually, it will also be dependent on how big the data centers become. Are they data parks that want to go with their own power plants and go for heavy-duty gas turbines? Do they want to eventually go to the grid? I think a lot of that is still being resolved. We see, though, continuous demand for this 150 MW-300 MW solution. We're providing that to the marketplace today.
In fact, we'll take our data center number up, I'm sure, in the future. We've also said, from an Industrial & Energy Technology perspective, that between 2026 and 2028, we'll have $40 billion-plus of order intake in Industrial & Energy Technology.
Moving to the next business line, Gas Technology Services. Tell the audience what it is and talk to the opportunity there.
Yeah, gas technology. I think it needs to be remembered that it's not as easy as you just take the gas and then it's available for use, and then you liquefy it into LNG. You actually need a lot of compression to be able to get it out. You need a lot of processing capability onshore. A great example is in Algeria. You look at a project that we're executing with Tazaramo, which is, again, compression stations that enable the gas to be extracted and then also transported through the pipeline to Europe. You look at the Master Gas System within Kingdom of Saudi Arabia, the network that's enabling the whole gas to be able to go through the pipeline.
That gas infrastructure is critically important because it's really the elements that enable you then to do something with the gas, not just take it out of the ground.
New energy offering. What's within that umbrella?
Yeah, new energy. Again, we started back in 2022 talking about new energy because, again, Baker Hughes' capability goes beyond just the traditional areas that people think. When you think about CCUS is about the drilling of storage wells, it's about the compression of CO2 into those wells, and it's the monitoring of those wells. All capability that Baker Hughes has. When you think of geothermal, again, it's the aspect of both from a conventional and an enhanced geothermal being able to take water and subsurface temperatures and rock formations and be able to generate 200, 300 MW, and the steam turbine that's required for that, as well as the insights into the subsurface. Key areas of new energy are CCUS, geothermal, emissions management and abatement, de-flaring. Today, there is still a lot of flaring that's happening around the world.
That is methane, it's natural gas that is wasted, and we have the capabilities to be able to recapture that and reutilize it, and we're executing one of the largest de-flaring projects in Iraq. Again, being able to, outside of the traditional element, new energy, be able to use what's wasted. You look at hydrogen. Again, forget the color of hydrogen. Hydrogen's utilized, and it's going to continue to be utilized in the space of energy spectrum, and we provide the compression that's required for hydrogen. We provide the elements of being able to help manufacture hydrogen, and we're on the Neom project within the Kingdom of Saudi Arabia. Last but not least, also on the clean integrated power solutions, continuing to look for ways to look at providing CO2-free energy to the world. Those are new technologies that we've been investing in.
The new energy, very pleased with the growth that we've seen. We started in 2022 at only a couple of hundred million. Everybody said the target that we put out there for 2030 of $6 billion-$7 billion was not necessarily realistic. We did over $2 billion last year. We've said we're going to do this year between $2.4 billion-$2.6 billion in new energy. It's a field that we continue to see opportunities to take existing capabilities we have within Baker Hughes to the new energy space.
Oil is a big market with great, if volatile, price discovery. Natural gas, even power, those are well-established markets. When you start to get into new energy, the challenge with a hydrogen economy or the challenge with a CO2 economy is smaller markets and price struggles. How do you think about a price of carbon, right? How do you underwrite R&D or technology offerings in CCUS, when you can't go to Bloomberg and pull up the price of CO2 globally?
Bob, I can say the same was said about the LNG. Having been in LNG for 30 years, you've got an energy expansion that's happening, and there's a natural cost curve that everything goes through. Just like you've seen LNG grow from many that didn't think it would grow at the outset, there's a natural space within the energy expansion for the new energies to play a role where it can be competitive, and it's got to find that area. If you think of hydrogen has aspects that are very beneficial when you think of large-scale mobility. When you think of Europe, you have hydrogen trucks. When you think of China, you have hydrogen buses. There are elements that are already emerging in the marketplace.
When you look at geothermal, again, something that's been around a long time, technology has now reinvented geothermal with enhanced geothermal, which is the ability now to recycle water through the aspect of a rock surface at much lower temperatures than previously needed to be able to produce the same amount of power. We announced with Fervo last year, a project with five wells producing enough to electrify 180,000 homes. It's a cost curve that you go through. Again, having been through LNG, I think we have competence in this area to be able to work through the technology and cost curve. These are not marketplaces that get formed in one year. I wish it were the case, and when you look back a few years ago, everybody was in a hydrogen frenzy. We said hydrogen is going to take time.
These things, unfortunately, energy is complicated, but the world ultimately needs more energy, and there's an energy expansion, not a detraction that's taking place. I think affordability, sustainability, and security are the fundamental elements that we're looking at.
If you have a choice of strategies to go to market, there's one where you invest in R&D, you create an offering, and then you go sell it. There's a trusted partner path, and then there's sort of a reactive provider path. How do you think about your new energy strategy for creating product lines or service lines?
We like to partner. We like to partner, and we like to look for good elements of added technology. On the organic path, if it's within our portfolio, we'll stay organic because it's compression related. One of the things that we do well at Baker Hughes is we take what we have that can be applied to multiple end markets, and we take critical equipment that can be applied to multiple end markets. We are one of the world's leaders in compression. We're one of the world leaders of rotating equipment. Rotating equipment is needed in a lot of different places. It's not just one particular. As we enhance the capability of that rotating equipment, it goes and feeds a lot of end markets.
We partner where we need know-how from the outside, as well as then being able to assist in the advancement of commercialization, different models, and we work with customers and partners alike.
We do have a follow-up question on the IET business. What does the service part of the turbines business look like compared to your competitors?
We love the razor blade model. I think it's one that we've spent a lot of time educating the marketplace on because the name Baker Hughes doesn't synonymize with an aftermarket. We have over 9,000 installed units, and they require maintenance, they require servicing, and they have a 20-30-year lifespan. As you think about the order intake that we've had and the increase that we have also going forward of installations, all of that is going to grow our aftermarket business later on. We have a very high attachment rate within the LNG. Overall for what we have installed, we look to 45%-50% on the LNG side. It's well above that in the 9-10 attachment rate with the service. These service agreements can be of different natures. That is a critical aspect of providing durability and also consistency.
One of the big things that we're doing at Baker Hughes is shifting from volatility to predictability and consistency. We like the aftermarket, we like the more durable end markets. That's why we're focused on production side of the Oilfield Services & Equipment, which is a continuous OpEx. That's why we like the aspect of the service business and that razor blade. I'll give you an anecdote that I find interesting because a lot of people ask, "Well, aren't they just two different animals?" When you have an artificial lift in the field, that artificial lift requires care and attention, and it requires chemicals. That is an OpEx business. It's like having a compressor in the field and having to maintain that compressor, or having a liquefaction train and having to maintain that liquefaction.
There's a lot of synergies and capabilities that we can bring across the two segments associated with that. There's actually a lot of synergy with the way in which we're building the Baker Hughes of the future.
You mentioned a desire for stability. If we went back to the early days of shale, oil price would drive rig count, Baker Hughes rig count. You should have a Baker Hughes turbine count, right? You should count other things, but we'll leave that to Chase. Rig count drove frac spread, and we just had incredible chaos in the system, boom bust cycles. Remarkably, we talked earlier, we've had fairly volatile oil prices in the last 10 years in the new Baker Hughes, but rig count has been reasonably well-behaved. Activity levels have been reasonably well-behaved. Do you prefer that, right? I guess from the amount of sleep you get, but from the amount of margin. Is it a well-behaved industry? It sounds like that's what you prefer.
I think, Bob, and you referenced something that historically is very well known, the Baker Hughes rig count. I can't say that I look at the Baker Hughes rig count that often because there is a dislocation that's happened over the course of the last 10 years, where new technology has driven improvements in rigs, and activity levels and production aren't necessarily associated the same way they used to be in the past. To me, I look at the aspect of what's the actual production and what's the activity level overall on the chemicals required, the ESPs required, what's the drilling? Not so much the aspect of the rig count itself. There's a lot of elements that go into it, and then obviously the price.
I think what we're trying to do at Baker Hughes is stay focused on more OpEx-levered elements that don't go through the upswings and downswings. That becomes more durable, and it has an aftermarket element to it and the application to multiple end markets. Again, the aspect of being able to understand the subsurface is applicable to CCUS, it's applicable to geothermal. That drilling of that well is applicable to multiple aspects. Likewise, as you think about the turbine or the compressor out there in the field.
If you hire an engineer out of university, they spend their career moving through Baker. Do they move across, or are they agnostic? Will they spend their career bouncing between these various segments? Is it really just a core skill of engineering, keeping the rotating equipment operating, etc. ?
Actually, we bring in engineers based on specific capabilities, and if you look at metallurgy, for example, that is consistent across the company. If you look at the elements of AI applications, it's consistent across the company. Clearly, there's some specialized fields, but the benefit is there's a lot of similarities when it comes to critical equipment or critical services that you're providing, and they require the same engineering know-how. We have engineers in their domain, and those domain cut across the company, and we have a technology council that makes sure that there's consistent sharing and that we actually apply the best of the capabilities across the company.
Move a bit to financial strategy. We do have a question I'll get to on Pigeonhole. First and foremost, we are close, months away from closing on your all-cash acquisition of Chart Industries. Doing that will bring net debt EBITDA up. There's a plan, a path to get it down one and a half times, while supporting R&D, while supporting the dividend, etc . Describe why Chart. Am I getting the near-term financial strategy right? I'll have a follow-up.
Chart is very much in line with the strategy that we communicated and the continued evolution across the capability of broadening Baker Hughes in industrial applications. If you think of the capability Chart has from a cryogenics, from the aspect of cold boxes with what they do from a management of the molecule, it fits very nicely and complementary to the capabilities we have. In fact, we've worked with them with customers in the past and know them well. We see it as very much a continuation of the portfolio expansion to further link the energy sources to industrial outcomes, and very happy with the capabilities that they'll bring into the fold. With regards to the financials, as you mentioned, yes, it's an all-cash transaction, and we will be taking debt to equity up at the outset.
We've said we're always going to be remaining capital disciplined. We are going to be bringing that down. We've already announced a number of actions and also dispositions. We have been continuously looking at the portfolio on what makes sense to have in the portfolio, what doesn't. Recently, we also announced the intent to dispose of Waygate Technologies at the beginning of this year, and that's going to be an aspect of continuing to bring that down to the one, 1.5 within a logical timeframe, safeguarding the dividends, safeguarding the capital investments we need to make. We are very conscious of needing to have a strong balance sheet as we go forward.
We have a question. Can you provide any more detail on the progress at NEOM on the development side, the product marketing side?
The only update I can provide you is that we're delivering the requirements from our standpoint. They are continuing to execute the aspect of the development as they've been communicating and no change from that.
In our final couple of minutes, what's the value proposition for owning Baker Hughes stock?
Well, clearly the upside coming in now. It's the durability of what we're creating for the long term. I think when you look at the macro picture, and the macro picture is one where there'll always be volatility and there'll always be geopolitics. However, the world needs more energy. I think that's a fundamental truth that is there. It's not just more energy, it's more variety of sources of energy, and that's going to be a key aspect as well. You're seeing that with the increase of data centers and artificial intelligence. All of that is going to further actually necessitate more energy being available. Also, as you look at going forward, it needs to be sustainable and affordable.
You need to have players with technology that can provide those solutions that actually drive that productivity and can connect the energy sources to the industrial outcomes, working in partnership with the end users. That's really the proposition that we're able to provide with not just a one year, it is a decade-long growth trajectory. I've said it before, I'll say it again, we are in an energy demand decade. It's maybe a bold statement. However, you look at all of the indicators, they're pointed towards more infrastructure being required where our rotating equipment, pumps, valves is necessary, turbines. You're looking at more power generation, so turbines being required. You're looking at more CCUS, which requires the subsurface knowledge, the drilling. You're looking at more oil and more gas production. All of those factors really give a good trajectory for Baker Hughes going forward.
That's what we laid out also in Horizon Two with some of the indicators for where we're taking the company by 2028 with a margin profile which is at 20% EBITDA as a combined company without Chart.
Fantastic. Thank you, Lorenzo, for your time. Thank you, audience, for your time.
Thank you very much, Bob Brackett