Baker Hughes Lifer Defends His Firm

By Ryan Dezember 

Martin Craighead's ascent to the upper levels of Baker Hughes Inc.'s management came as the oilfield-service company swallowed a rival to better compete with larger companies Halliburton Co. and Schlumberger Ltd.

Now the 54-year-old, in his first full year as both chairman and CEO of Houston-based Baker Hughes, is grappling with a hostile overture from Halliburton, which is looking to turn the oilfield-services sector's Big Three into a Big Two.

Mr. Craighead, an engineer by training, is a Baker Hughes lifer, having joined in 1986. Before that, he worked as an engineer in the research and development department at BJ Services Co., a company Baker Hughes bought in 2010.

The $5.5-billion BJ acquisition, made during the sector's last wave of consolidation, boosted Baker's exposure to North America, where the shale drilling boom was revving up as energy explorers combined horizontal drilling and hydraulic fracturing to unlock troves of oil and gas. BJ's specialty is pressure pumping, a process in which millions of gallons of fluid is pushed into wells to crack open energy-bearing rocks.

The deal plugged holes in Baker's offerings at a time when oil-and-gas producers, including national oil companies, were increasingly looking for service contractors that could handle projects from start to finish, from drilling $10-million shale wells to developing multibillion-dollar fields miles beneath the ocean's surface.

Mr. Craighead was Baker Hughes chief operating officer when the BJ deal was made and was tasked with integrating the company into Baker Hughes and sorting out the combined company's supply chain. Now about half of the company's sales come from North America.

Raised in the Pittsburgh area, Mr. Craighead studied petroleum engineering at Pennsylvania State University and later added a business degree from Vanderbilt University.

He has an academic bent, and continued to author technical papers with his former professors during his career in the Oil Patch. Often in speeches, he talks about the importance of recruiting young scientists, mentioning the company's partnership with Houston's Rice University, which it taps for nanotechnology expertise it has applied to drilling.

In an interview last year with a Society of Petroleum Engineers publication, he said he decided he wanted to manage after leading a project in South America.

"It first became obvious to me when I was thrown into a turnaround operation in western Venezuela as a district manager," he said. "I really enjoyed getting the best out of people, particularly unrecognized talent. I was highly motivated to wipe out threats in direct conflict to our business with what I believed was best for the company."

He managed various Baker Hughes operations, including in the U.S. and Singapore, before become chief operating officer in 2009. He added the title of president the next year and became CEO at the start of 2012, replacing Chad Deaton, who held the job for seven years. Mr. Deaton remained chairman until last year when Mr. Craighead took on that role as well.

After Mr. Craighead became CEO, Baker Hughes shares rose about 46% through June, when falling oil prices pulled the stock lower. Last month, Baker Hughes reported record quarterly revenue of $6.25 billion and a rise in profit despite disruptions in Iraq, Libya and Russia as well as project delays in the Gulf of Mexico.

Last year, he received compensation valued at just under $9 million, according to a securities filing. In the event he loses his job due to a takeover, such as Halliburton proposes, Mr. Craighead is due compensation that was valued at about $26.5 million earlier this year. He will receive $11.5 million if he has a role in a combined company, according to the filing.

Write to Ryan Dezember at [e-mail]

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