Oil Industry Embedded Systems -- Baker Hughes Inc Non-compliance Problems

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Folks,

I'm not sure how this is going to come out in the format. Like so many others here, I admit to being html-challenged. The following has been cut and pasted from the website of a major oil industry supplier of equipment including embedded systems. Actually I could have posted 32 pages of data including Embedded systems and chips that have been designated as being non-compliant for Y2K. These are products that were sold to the oil companies for oil well development, production refining, etc. It's frustrating to know what to cut out and what to include. I suggest you take the link and go explore for yourself but the website is huge and you should explore each companies product lines for themselves within the site. This is where they list their compliant and non-compliant products. Below is just some of the 10-Q assessment. As I said, IF you all wish I can paste (in another thread perhaps?) some of the listed items that are non-compliant. Also, there are many items listed as compliant BUT the company notes that many of these are used or placed within other systems and customization can make them non-compliant. So the caveat is beware of most everything. The following is approximately 4 pages of highlights. Somewhere within I've inserted a couple of Editorial comments as this was pasted from a 92 page report on not only this but many other oil company 10-Q statements.

Baker Hughes Inc

http://www.bakerhughes.com/

Baker Hughes is a leading supplier of reservoir-centered products, services, and systems to the worldwide oil and gas industry, and a leading supplier of separation technologies to the worldwide process industries.

Baker Hughes creates value for oil and gas producers by providing life-of-the-field geoscience information services and downhole technologies from the earliest stages of discovery through enhanced recovery from mature fields.

 Reservoir Modeling  Seismic and petrophysical data, reservoir imaging, and 4-D time-lapse monitoring

 Well Placement and Construction  Extended-reach and horizontal drilling, wireline logging and measurement-while-drilling, geosteering, and multilateral completions

 Production Management  Well stimulation, electrical submersible pumping, specialty chemicals, and downhole oil/water separation Today Baker Hughes is a company serving the worldwide petroleum and continuous process industries. Through its eight oilfield service companies, Baker Hughes provides products and services for exploration, drilling, completion and production of oil and gas wells. Its process company provides equipment and services for a variety of process applications. The company has continually improved its technology and market position through nearly 30 acquisitions and divestitures. Baker Hughes' annual revenues are approximately $6.3 billion. Corporate headquarters are in Houston , Texas, and the Company employs about 30,000 people worldwide.

Operating Entities Covered By This Disclosure:

Baker Hughes Incorporated, a Delaware corporation ("BHI"), is comprised of the following operating divisions and subsidiaries that are addressed by this statement: Baker Oil Tools, Baker Petrolite Corporation (formerly Baker Performance Chemicals Incorporated), Hughes Christensen, Centrilift, Western Geophysical, Baker Atlas (formerly Western Atlas Logging Services), Baker Hughes INTEQ, E&P Solutions (formed by the combination of Baker Hughes Solutions and Western Atlas E&P Services), and Baker Process (formed by the combination of EIMCO, Bird Machine Company, and Baker Hughes Process Systems).

As the new millennium approaches, the Year 2000 (Y2K) problem poses serious threats to companies all around the world - including BHI, its clients and its vendors. In response, BHI has initiated the Y2k Program to combat this problems' impending challenges. This website has been created to outline the Y2k Programs' approach to the problem and to provide status on the Program.

SEC 10Q - YEAR 2000 ISSUE

Filed August 1999

Forward-Looking Statements Regarding the Year 2000 Issue The words "expect," "believe," "will," "estimate," "target" and similar expressions are intended to identify Forward-Looking Statements in "Year 2000Issue." Although the Company expects that it will complete various phases of its Year 2000 Program Plan (the "Program Plan") as described below, including (without limitation) the specific remedial and corrective aspects of the program or the contingency plans described below, there be no assurance that the Company will be successful in completing each and every aspect of the Program Plan and, if successful, within the expected schedules described below. Factors that could affect the Company's implementation of its Program Plan include unforeseen difficulties in remediating a specific problem due to the complexity of hardware and software, the inability of third parties to adequately address their own year 2000 issues, including vendors, contractors, financial institutions, U.S. and foreign governments and customers, the delay in completion of a phase of the Program Plan necessary to begin a later phase, the discovery of a greater number of hardware and software systems or technologies with material year 2000 issues than the Company presently anticipates, and the lack of alternatives that the Company previously believed existed.

Known Material Y2K Non-compliant Hardware and Software:

The following are certain hardware and software that are material to the Company's business that the Company knows is or was not in Y2K compliance. The failure to remediate any of this hardware or software or develop an appropriate contingency plan could have a material adverse effect on the Company's business.

INTEQ / Baker Petrolites Polymers division:

INTEQ and the Polymers division of Baker Petrolite are implementing SAP R/3for domestic operations during 1999. INTEQ has delayed remediation of its existing payroll system, and the Polymers division of Baker Petrolite has delayed implementation of its business applications systems that SAP R/3 will replace, pending the implementation of SAP R/3. Contingencies for these operational areas are being evaluated, and the Company expects to implement a contingency plan if the SAP implementation is not timely. Older versions of INTEQ's PC-based surface data acquisition systems are notY2K compliant. The software is in the process of being remediated. The noncompliant PC hardware cannot be economically remediated, and the purchase of new, higher grade personal computers is required to replace the noncompliant equipment. This remediation began in 1997 with the replacement of personal computers being phased in and is expected to be completed by late 1999. INTEQ has released for distribution Y2K compliant products for its well planning and surface logging products. INTEQ has also released a Y2K compliant version of its MSS Surface software that supports its measurement while drilling, surface logging system and RigLink products and services. Finally, INTEQ has released a Y2K compliant version of its survey product line (SSP).

Baker Atlas:

Baker Atlas' bonded inventory control module was not Y2K compliant. Baker Atlas rewrote this module that tracks assets that are used in international waters that may be exempt from import duties.

Western Geophysical:

The Company's Western Geophysical operating division relies heavily upon Global Positioning System ("GPS") equipment that the U.S. Navy operates. The noncompliance of this equipment is a known problem outside the control of the Company that affects other businesses, the government, the military services and individuals that rely upon GPS services, including most of the Company's competitors. Based upon information obtained from the U.S. government, this system was remediated during early 1999. The Company is not aware of any contingency system that its GPS receivers can utilize if the government's GPS remediation efforts were somehow unsuccessful. A failure to correct the Y2Kproblems of this equipment could have a material adverse impact on the Company's results of operations. Western Geophysical uses a seismic acquisition synchronizer as part of its marine seismic data acquisition services. This product was not Y2K compliant. The Company has completed an upgrade remediation plan for this equipment.

[Editor Alert:--- NOTE THE FOLLOWING]-------

Western Geophysical has discovered two seismic data acquisition systems used on its marine vessels that have components that are not Y2K compliant. One system is used on nine vessels, and the other system is used on eight vessels. A single third party manufacturer makes both systems. The manufacturer has created a Y2K compliant version of the first of these systems, which Western Geophysical expects to obtain and install in August 1999. The manufacturer has advised Western Geophysical that it will not bring the second of these two systems into Y2K compliance. Western Geophysical is negotiating with the manufacturer to license the source code to this second system for Western Geophysical to remediate this system itself by late 1999. Additionally, contingency plans for both of these systems are being developed.

-----[End of Editor Alert]-------------

Baker Process:

Baker Process is implementing a new business application system to replace its existing systems, which are not Y2K compliant. This system includes financial, purchasing, inventory management, and manufacturing functionality. Baker Process' North American operations are now utilizing this new system. The Company expects Baker Process to complete the implementation of the new system outside of North America by late 1999. The Baker Process operating division provides mechanical equipment that, in some cases, has been customized at the request of the customer to include control panels and circuit boards. The Company obtained these control panels and circuit boards from third-party vendors at the request of various customers. The Company researches the Y2K compliance status of these boards when its customers request it to do so. The Y2K status of these boards is often dependent upon the purchase date and serial number of the product. The warranties from the Company or its subcontractors have, in many instances, lapsed with respect to these panels and circuit boards.

Baker Petrolite:

Baker Petrolite operates a system that controls treater truck scheduling and customer invoicing. This system was not Y2K compliant. Baker Petrolite has now completed remediation of this system. Baker Petrolite has been unable to obtain assurances from its payroll service provider that certain custom processing services will be Y2K compliant. The Company is performing testing services with this vendor to determine whether the vendor's services as applicable to the Company will be Y2K compliant. The Company expects that this testing and any resulting remediation will be completed by September 30, 1999.

E&P Services:

E&P Services' oil and gas accounting system is not Y2K compliant. E&P Services expects to obtain an upgrade to this system from its third party vendor to bring this system into compliance by September 30, 1999. E&P Services obtains oil and gas interpretation systems from third party vendors. E&P Services is testing these systems to determine whether they are Y2Kcompliant.

Most Reasonable Worst Case Scenario:

The Company's customers ordinarily contract for helicopter and fixed-wing air transport services to transport Company personnel and equipment to customer oil and gas operations sites. Often these services are provided by smaller aircraft operators. The Company believes that many of these operators have not yet adequately addressed their Y2K compliance needs. If a material number of these operators experience flight disruptions because of Y2K non-compliance, the Company's customers could have difficulties in obtaining transport services, which in turn, could delay the Company in providing its products and services to its customers. The Company is developing contingency plans for this problem and contacting these air transport service providers to enhance their awareness ofY2K issues and promote their Y2K compliance.

Certain of the Company's divisions and corporate operations are in the process of upgrading their network and personal computer based hardware and software, including hardware and software of general application, to be Y2Kcompliant. Likewise, certain of the Company's divisions and corporate operations are in the process of upgrading hardware and software that operate facilities, particularly foreign facilities, to be Y2K compliant. While the Company does not believe that the failure of any one of these systems alone would materially and adversely affect the Company's operations, a failure to upgrade a substantial number of these systems would have a material adverse effect on the Company. The Company expects that it will have upgraded a substantial number of these systems by the end of 1999.

----[Editor's comment-- Note that they don't use the word "ALL" and note when -- by the End of 1999. I wonder what the percent is that will be upgraded? How many won't make it and what is the significance?]----------

Based upon the status of the Company's Y2K compliance effort to date and those facts and circumstances known to the Company, the Company believes that the most reasonably likely worst case scenario as a result of Y2K noncompliance would be as follows:  the Company's INTEQ division (and to a lesser extent, its Baker Atlas division) is unable to complete deployment of Y2K compliant data acquisition systems by December 31, 1999;  Baker Process is unable to complete implementation of Y2K compliant business systems by the end of the fourth quarter of 1999;  the infrastructure in certain international locations such as countries in Latin America, the Middle and Far East and Africa, would experience failures in utility service because the utility service providers are not Y2K compliant; and

--- [Ed Alert: Utilities problems overseas?? ]-----

 critical vendors of the Company fail to perform because they are not Y2K compliant.

The occurrence of any or all of these events could have a material adverse effect on the Company's results of operations, liquidity or financial position. Although the occurrence of these events is what the Company believes is the most reasonably likely worst case scenario, these events may or may not occur, and the Company cannot predict what will actually occur. Other events might occur that also could have a material adverse effect on the Company's results of operations, liquidity or financial position.

END of BAKER HUGHES Inc. segment.

As I said, there is a lot more to this than what you see here. I've simply tried to highlight some of the items that seem to need more attention. The boat situation is quite noteworthy. Now, how important is it for you to see a partial listing of some of the embedded systems that are non-compliant? Let me know, I don't want to waste bandwidth as anyone with some time and determination will stumble across them within each division's page of non-compliant products.



-- R.C. (racambab@mailcity.com), October 16, 1999

Answers

I didn't know the GPS was still at risk. That was news to me.

-- Paula (chowbabe@pacbell.net), October 16, 1999.

Paula,

Apparently their version of the GPS wasn't or isn't Y2K compliant. Yeh, this was news to me to. At first I thought it was just a disclaimer about GPS rollover compliance...but apparently this has some other chip factors involved in Y2K compliance.

-- R.C. (racambab@mailcity.com), October 16, 1999.


Great Post. Keep up the good work R.C.

This is the kind of real information that Ed and others have been screaming all along that people need availability to.

-- Dana (A_Non_O_Moose@xxx.com), October 16, 1999.


Dana,

I gave Ed the information on this and 23 other oil companies several days ago. It may take him awhile to digest it. Hey it took me a long time also.

-- R.C. (racambab@mailcity.com), October 16, 1999.


Thanks RC! For several months now, I have had the feeling that our greatest worry would be the import of oil/energy. I certainly do appreciate your info efforts.

-- jeanne (jeanne@hurry.now), October 16, 1999.


Great post! Are polymers female polly's?

-- Jokeman (It'sok@tolaugh.com), October 16, 1999.

Folks

Go back to the site that RC lists and read what it says about the GPS systems in the SEC disclosures section. The information contained is clearly "OLD" information, but RC continues to spin it up like it is hot stuff, like he has been spinning us up for several months. I have no faith in any RC statements. But this does not make the problems in the oil/gas sector go away.

dave

-- dave (wootendave@hotmail.com), October 17, 1999.


RC, Nice work. Might I ask how you stumbled upon this site? Are you... say... employed by or otherwise associated with the good fellows at Baker Hughes?

Man, you got to hand it to the lawyers for that load of liability limitations. Here is my summary:

"We have no idea what is going to happen. Here is a list of some of our stuff that won't work. Deal with it. We will be working on patches 'till the end of 1999, and since we won't have any time left to test, we are probably toast. Many of our vendors are also toast, so don't blame us."

Again RC, nice work, and keep it coming. This is just the sort of worthwhile reading that I come to this board for. Thanks for taking the time.

-- semper paratus (llmcl@usa.net), October 17, 1999.


Semper,

No, I'm not affiliated with anyone in this company. I was aware of the company from sources within the industry and found the API links and went from there.

This is truly an amazing website. I recommend that anyone interested in this material should download and save the pertinent webpages as I'm not sure if they'll keep this information public now that the cat is out of the bag. They might just make this a "members only" site.

There was I believe an API website for "members only" to post and share Y2K problems and solutions but I couldn't access it and their statement on membership was quite clear that all information was to never be released to the public. Apparently they DO have something to hide.

-- R.C. (racambab@mailcity.com), October 17, 1999.


Dave,

You said: "Go back to the site that RC lists and read what it says about the GPS systems in the SEC disclosures section. The information contained is clearly "OLD" information, but RC continues to spin it up like it is hot stuff,"

MY RESPONSE: EXCUSE ME!!!!?????????!!!!!! OOOOLLLLLDDDDD????????

The specific section you reference is from the 10-Q statement of June 1999 for the Western Geophysical Company division...which then goes on to list some of its other non-compliant situations such as the following: [Note the dates for each are the dates that information was posted on said product... Note the following are ALL in late September or about 3 weeks ago, and other divisions have dates as recently as this past week!!! So don't talk to me about OLD DATA!]

Western Geo Seismic Data Processing Services Deep Water Marine Seismic Data Acquistion Services (and Data Products); MSX Non-Compliant with Millennium Date Change or Leap Year; Remediation in Progress September 15, 1999

Western Geo Seismic Data Processing Services Deep Water Marine Seismic Data Acquistion Services (and Data Products); Syntrak 960 Non-Compliant with Millennium Date Change or Leap Year; Remediation in Progress September 24, 1999 Western Geo Seismic Data Processing Services Deep Water Marine Seismic Data Acquistion Services (and Data Products); Titan Non-Compliant with Millennium Date Change or Leap Year; Remediation in Progress September 24, 1999 Western Geo Seismic Data Processing Services Deep Water Marine Seismic Data Acquistion Services (and Data Products); WG24 and/or WG24A Non-Compliant with Millennium Date Change or Leap Year; Remediation in Progress September 24, 1999 Western Geo Seismic Data Processing Services Land and Transition Zone Seismic Data Acquisition using I/O Seismic Data Acquisition Systems Non-Compliant with Millennium Date Change or Leap Year; Remediation in Progress September 23, 1999 Western Geo Seismic Data Processing Services Land and Transition Zone Seismic Data Acquisition using Sercel Seismic Data Acquisition Systems Non-Compliant with Millennium Date Change or Leap Year; Remediation in Progress September 23, 1999 Western Geo Seismic Data Processing Services Ocean Bottom Cable Seismic Data Acquisition Services (and Data Products); I/O Non-Compliant with Millennium Date Change or Leap Year; Remediation in Progress September 24, 1999 Western Geo Seismic Data Processing Services Ocean Bottom Cable Seismic Data Acquisition Services (and Data Products); Syntrak Non-Compliant with Millennium Date Change or Leap Year; Remediation in Progress September 24,

Western Geo Software Packages Sonardyne Acoustic Post Processor (SAPP) Century Date Compliant; with Issues September 30, 1999

Dave, you didn't BOTHER READING THE DATES ON THIS WEBSITE DID YOU? DID YOU GO BACK TO CHECK ALL THE UPDATES... THIS WEBSITE IS UPDATED DAILY!!! ANY CHANGES ARE UPDATED AS THEY COME IN!!! This is the most frequently updated oil company website with Y2K data in the industry perhaps in all of any industry, at least that I've seen.

GO BACK AND DO YOUR HOMEWORK FIRST BEFORE YOU ATTEMPT TO DEBUNK SOMEONE! THE GPS IS REFERENCING Y2K chips, within the equipment itself! Apparently they think there may be further compliance problems at year end with some equipment. It is not referencing the August satellite rollover aspect.

Frankly Dave, you have no credibility here! This is NOT HYPE just the facts, get used to it!

-- R.C. (racambab@mailcity.com), October 17, 1999.



Dave,

Just to further underscore the NEWNESS of this websites information and to underscore that the material is changed as it becomes outdated Here's another product that has had its compliance status updated as of 2+ days ago... IS THAT CURRENT ENOUGH FOR YOU???????????

This comes in to the Baker Hughes division known as Inteq...

Inteq Drilling Systems Technologies - OrientXPress (Application Software) Maniac.exe [PN 77754] Not Compliant; Contingency Plan Available Soon October 14, 1999

DO YOU CATCH THAT DAVE --- OCTOBER 14,1999... I'm posting this on late October 16th, 1999... I'd say that is pretty new. This website updates and changes its material as conditions warrant and as information comes in.

What a moron! How dare you insinuate as you have so done sir!

-- R.C. (racambab@mailcity.com), October 17, 1999.


In case you hadn't noticed, RC, the world did not crash on August 21, and the Navy end of the GPS system seems run on OK, and will probably continue to do so. Your source, however says in several places that the Navy may screw up at GPS rollover time. Your source is out of date.

dave

-- dave (wootendave@hotmail.com), October 17, 1999.


Dave,

Don't let your stupidity show any further. Here' the only statement regarding the GPS factor...

"The Company's Western Geophysical operating division relies heavily upon Global Positioning System ("GPS") satellites and ground control stations that the U.S. Department of Defense operates. The noncompliance of this equipment was a known problem outside the control of the Company, which could have affected other businesses, the government, the military services and individuals that rely upon GPS services, including most of the Companys seismic business competitors and all of the world's major airlines. Based upon information obtained from the US Government, this system was remediated during early 1999. The Company is not aware of any contingency system that its GPS receivers can utilize if the governments GPS remediation were somehow unsuccessful. Specific GPS receivers in use by Western have been tested and will all be upgraded to compliant firmware levels by July 15, 1999."

This portion of the 10-Q was indeed made prior to August Rollover. That does NOT make the statement out of date nor old news. The company has also posted a similar statement to the 10-Q that is updated as conditions warrant. I SEE IN YOUR HASTE TO DEBUNK YOU CHOSE TO IGNORE THE TIME DATED INFORMATION PROVING THE WEBSITE IS BEING UPDATED AS NECESSARY. Regarding the GPS ... this is left posted for those customers who might have missed it before.

NOW DAVE...Your comment about the NAVY... "Your source, however says in several places that the Navy may screw up at GPS rollover time."

NO! NO! NO! NO! NO! NO! NO! NO! What have you been smokin' boy? "Navy" isn't even used here. No that is NOT what they say. Go back to first grade and learn to read again, for real this time.

Meanwhile, I've got to remember to quit feeding the trolls.

-- R.C. (racambab@mailcity.com), October 17, 1999.


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