General Electric at Morgan Stanley Conference Notes

Lorenzo Simonelli – President, GE Oil & Gas

We’re here for the long term

“look you all know what’s happening in the industry; we’re in this though because we look at the long-term and we still say that the macro trend is positive for the Oil & Gas industry. When you think about the growing population, the growing consumption of energy demand, we’re long and we think that we’re in the right segments as well. When you look at LNG, you look at gas going from coal to cleaner hydrocarbons; when you look at the unconventional space, also deepwater coming back. So the industry is going to be cyclical and it’s going to continue to be cyclical but the long-term trend still bodes well. And that’s why we came into this. We didn’t come into this industry over 20 years ago because we were looking at the price of oil. We came into this industry because we were looking at the long-term trends and also how it fits into GE portfolio. And that’s something that’s important to understand.”

Early days to say we have bottomed out

“Well, I think it’s early days when you start to say have we bottomed out and you’ve got to look at it from both North America perspective and then a global perspective, and in North America you’re starting to see some indicators, you’ve seen them externally like I do where rig count has started to improve. Internationally, you’re still seeing a decline. So I think it’s early days, this industry is volatile, it’s cyclical and we’ve got to be ready for that volatility. So I think the best thing we can do is stay the course on the actions that we’ve put in place and really look at the industry as paying an output of more than the major input. So we’re focusing on our cost out and focusing on the product side. And then as we — we know one thing, the depletion rate to there, we believe in the long-term from a macro perspective, the energy demand and the requirement for Oil & Gas to time it exactly when the turning point is, that’s what we’ll wait and see.”

We think additive manufacturing is a game changer

“I think it’s a game changer and when you look at what we’ve done in the space of additive and 3D printing, we are early entrants, a great move with regards to buying the capability now to have the machines that can manufacture and actually the printers that enable us in our factories to create the 3D printed spare parts, the blades; and the huge advantage for us is, you think about a future where our service shops or our customers that have large installed bases now have a printer outside. You take out all that lead time, you take out all that working capital that was previously deployed and this is a game changer. We are already utilizing it within our factories as much more we can do. We’re working with David Joyce, who really has the center of excellence for additives within General Electric. And we view this across the company as an opportunity and for GE oil and gas, I view it as a way that we can be differentiated again and be more meaningful for our customers and be more efficient.”