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Baker Hughes (BKR) to Make Non-Metallic Pipelines With Aramco

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Baker Hughes Company BKR announced the formation of a joint venture with partner Saudi Aramco to develop and market a diverse range of non-metallic products to serve multi-purposes in the energy sector.

The joint venture was named Novel Non-Metallic Solutions Manufacturing (“Novel”), with both companies holding equal shares. Notably, in July 2019, both companies entered a memorandum of understanding (“MoU”) for the non-metallics JV creation. The latest facility of Novel is being built at King Salman Energy Park (“SPARK”), an energy city spreading more than 50 square kilometers in the Eastern Province of Saudi Arabia. At the initial stage, the plant will utilize composite materials for the production of onshore non-metallic pipelines like reinforced thermoplastic pipes (“RTP”).

Importantly, the new plant is expected to generate employment as well as promote economic growth of an emerging sector, which follows Saudi Arabia’s Vision 2030 to reduce its dependency on oil and diversify the economy.

Notably, the project is aimed at transforming the Kingdom of Saudi Arabia into a global energy, industrial and technology center. Several industries, including the oil and gas sector, are deploying non-metallic products as they are more efficient, affordable and provide sustainability benefits. Thus, Novel expects to partner with customers to boost innovation in the energy sector, using its cutting-edge manufacturing processes.

The JV supports Aramco’s strategy to explore the opportunities in oil-based products and aims to reduce carbon emissions. It further upholds Saudi Arabia’s efforts to expand its commercial economy and foster domestic investments. On its part, Baker Hughes’ plan to invest in certain business areas like non-metallics to stimulate growth and hope that the joint venture will benefit several industries.

Company Profile & Price Performance

Headquartered in Houston, TX, Baker Hughes is one of the leading oilfield service providers. Its shares have outperformed the industry in the past six months. The energy company’s stock has gained 45.4% compared with the industry’s 29.8% growth.



Zacks Rank & Stocks to Consider

Baker Hughes currently carries a Zack Rank #3 (Hold). Some better-ranked players in the energy space are DCP Midstream Partners LP DCP and Hess Midstream Partners LP HESM, each currently sporting a Zacks Rank #1 (Strong Buy), and Enerplus Corporation ERF, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, the Zacks Consensus Estimate for 2020 earnings for Hess Midstream has been raised by 1450%.

DCP Midstream is expected to see earnings growth of 199.5% in 2021, whereas Enerplus is likely to see an earnings rise of 816.5% in 2021.

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