In the oil field services industry, technology puts you at the top of the heap. It is no coincidence that Schlumberger (NYSE: SLB ) , the biggest oil field services provider in the world, is also the largest seismic imaging company. Technology improves every aspect of exploration and production, and in many cases it saves time and money.

Baker Hughes (NYSE: BHI ) , often playing third fiddle to Schlumberger and Halliburton (NYSE: HAL ) , is using technology in theory and practice to strengthen its position in the oil field services game.

In theory
At the very end of February, Baker Hughes launched a very important partnership with Saudi Arabia's national oil company, Saudi Aramco. The two firms opened the Baker Hughes Dhahran Research and Technology Center with the hopes of studying and solving the world's biggest energy production challenges.

The center will focus mainly on unconventional resources and offers state-of-the-art laboratories for students and scientists specializing in petrophysics, drilling, geomechanics, fluids, and production technology.

The new project increases Baker Hughes' footprint in Saudi Arabia. The company has now brought online at least one significant project there in each of the past three years, including a manufacturing plant in 2011 and an operations center in 2010.

In practice
The company is scheduled to deliver a state-of-the-art pressure-pumping ship to provide offshore services to Maersk Oil in the North Sea. The giant vessel, cleverly named Blue Orca, will have one of the largest fluid and proppant carrying capacities in the world. Able to provide 15,000 hydraulic horsepower pumping capacity, the Blue Orca will be capable of pumping more than 60 barrels per minute.

Maersk is counting on the vessel to stimulate long horizontal wells in the North Sea. The Blue Orca should be up and running by late 2013.

Foolish takeaway
Baker Hughes recently announced that first-quarter margins will be lower than expected because of seasonality, international project delays, and market conditions for pressure pumping. As a result, the stock has fallen nearly 10% since the announcement. Many of these issues will also affect other oil field service companies, so it wasn't surprising to see shares of Schlumberger and Halliburton both down 5%.

Baker Hughes releases first-quarter earnings on April 24. If the numbers come in lower than expected, it may provide an excellent buying opportunity for investors who see long-term value in Baker Hughes' commitment to technology.

In the meantime, keep an eye on company news and analysis by adding it to My Watchlist.


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