Business Segments and Geographic Areas

12 Months Ended

Dec. 31, 2019

16. Business Segments. and Geographic Areas

The Company’s operations are organized into three operating segments: Wellbore Technologies, Completion & Production Solutions and Rig Technologies.

Wellbore Technologies

The Company’s Wellbore Technologies segment designs, manufactures, rents, and sells a variety of equipment and technologies used to perform drilling operations, and offers services that optimize their performance, including: solids control and waste management equipment and services; portable power generation; drill pipe; wired pipe; drilling optimization and automation services; tubular inspection, repair and coating services; instrumentation; measuring and monitoring; downhole and fishing tools; steerable technologies; and drill bits.

Wellbore Technologies focuses on oil and gas companies and supports drilling contractors, oilfield service companies, and oilfield equipment rental companies. Demand for the segment’s products and services depends on the level of oilfield drilling activity by oil and gas companies, drilling contractors, and oilfield service companies.

Completion & Production Solutions

The Company’s Completion & Production Solutions segment integrates technologies for well completions and oil and gas production. The segment designs, manufactures, and sells equipment and technologies needed for hydraulic fracture stimulation, including pressure pumping trucks, blenders, sanders, hydration units, injection units, flowline, and manifolds; well intervention, including coiled tubing units, coiled tubing, and wireline units, BOPs, and tools; onshore production, including fluid processing systems, composite pipe, surface transfer and progressive cavity pumps, and artificial lift systems; and, offshore production, including fluid processing systems, floating production systems, subsea production technologies, and connectors for conductor pipe.

Completion & Production Solutions supports service companies and oil and gas companies. Demand for the segment’s products depends on the level of oilfield completions and workover activity by oilfield service companies and drilling contractors, and capital spending plans by oil and gas companies and oilfield service companies.

Rig Technologies

The Company’s Rig Technologies segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore as well as other marine-based markets, including offshore wind vessels. The segment designs, manufactures and sells land rigs, offshore drilling equipment packages, including installation and commissioning services, and drilling rig components that mechanize and automate the drilling process and rig functionality. Equipment and technologies in Rig Technologies include: substructures, derricks, and masts; cranes; jacking systems; pipe lifting, racking, rotating, and assembly systems; fluid transfer technologies, such as mud pumps; pressure control equipment, including blowout preventers; power transmission systems, including drives and generators; rig instrumentation and control systems; mooring, anchor, and deck handling machinery; major equipment components for offshore wind construction vessels; and pipelay and construction systems. The segment also provides spare parts, repair, and rentals as well as comprehensive remote equipment monitoring, technical support, field service, and customer training through an extensive network of aftermarket service and repair facilities strategically located in major areas of drilling operations around the world.

Rig Technologies supports land and offshore drillers. Demand for the segment’s products depends on drilling contractors’ and oil and gas companies’ capital spending plans, specifically capital expenditures on rig construction and refurbishment; and secondarily on the overall level of oilfield drilling activity, which drives demand for spare parts, service, and repair for the segment’s large installed base of equipment.

Geographic Areas:

The following table presents consolidated revenues by country based on sales destination of the products or services (in millions):

	Years Ended December 31,
	2019		2018		2017
United States	$	3,112	$	3,480	$	2,760
Norway		512		368		295
Singapore		473		321		188
Saudi Arabia		436		444		310
United Kingdom		333		309		279
China		285		231		298
Brazil		269		415		498
Canada		247		302		286
United Arab Emirates		224		248		223
South Korea		69		169		261
Other Countries		2,519		2,166		1,906
Total	$	8,479	$	8,453	$	7,304

The following table presents plant, property and equipment by country based on the location (in millions):

	December 31,
	2019		2018
United States	$	1,257	$	1,603
Brazil		194		217
United Kingdom		112		125
Denmark		111		119
South Korea		77		91
Canada		77		79
United Arab Emirates		52		60
Mexico		43		48
Singapore		28		47
Russia		16		69
Other Countries		387		339
Total	$	2,354	$	2,797

Business Segments:

The following table presents selected financial data by business segment (in millions):

	Wellbore Technologies			Completion & Production Solutions			Rig Technologies			Eliminations and corporate costs (1)			Total
December 31, 2019
Revenue	$	3,214		$	2,771		$	2,682		$	(188	)	$	8,479
Operating profit (loss)⁽²⁾		(3,551	)		(1,934	)		(524	)		(270	)		(6,279	)
Capital expenditures		123			64			31			15			233
Depreciation and amortization		284			150			87			12			533
Goodwill		843			1,054			910			—			2,807
Total assets		4,078			3,826			3,758			1,487			13,149
December 31, 2018
Revenue	$	3,235		$	2,931		$	2,575		$	(288	)	$	8,453
Operating profit (loss)⁽²⁾		131			166			213			(299	)		211
Capital expenditures		135			87			17			5			244
Depreciation and amortization		374			212			90			14			690
Goodwill		3,011			2,041			1,212			—			6,264
Total assets		7,929			6,233			3,906			1,728			19,796
December 31, 2017
Revenue	$	2,577		$	2,672		$	2,252		$	(197	)	$	7,304
Operating profit (loss)⁽²⁾		(102	)		98			(14	)		(259	)		(277	)
Capital expenditures		99			69			16			8			192
Depreciation and amortization		379			215			88			16			698
Goodwill		2,956			2,122			1,149			—			6,227
Total assets		7,848			5,782			4,625			1,951			20,206

(1)

Sales from one segment to another generally are priced at estimated equivalent commercial selling prices; however, segments originating an external sale are credited with the full profit to the Company. Eliminations and corporate costs include intercompany transactions conducted between the three reporting segments that are eliminated in consolidation, as well as corporate costs not allocated to the segments. Intercompany transactions within each reporting segment are eliminated within each reporting segment. Also included in the eliminations and corporate costs column are capital expenditures and total assets related to corporate. Corporate assets consist primarily of cash and fixed assets.

(2)

Segment operating loss for 2019 includes charges for: goodwill, other intangible asset and other long lived asset impairments (Wellbore Technologies $3,565 million; Completion and Production Solutions $1,865 million; and, Rig Technologies $389 million); inventory write-downs (Wellbore Technologies $130 million; Completion and Production Solutions $148 million; and, Rig Technologies $355 million); and a voluntary early retirement program (VERP), other severance and facility closure costs (Wellbore Technologies $64 million; Completion and Production Solutions $30 million; and, Rig Technologies $37 million). Segment operating profit for 2018 includes charges for facility closure (Wellbore Technologies $28 million) and non-operational credits (elimination and corporate costs ($18) million). Segment operating profit or loss for 2017 includes charges for: inventory write-downs (Wellbore Technologies $4 million; Completion and Production Solutions ($6) million; and Rig Technologies $110 million); and severance and facility closure costs (Wellbore Technologies $18 million; Completion and Production Solutions $32 million; and Rig Technologies $20 million).