GE's Energy Future: It's Still Straddling the Clean-Energy Fence

After GE Energy's cleantech shopping spree in recent months, it's easy to forget that the company has major aspirations for its oil and gas sector as well. We all got a friendly reminder this week when GE acquired oil and gas equipment maker Dresser in a $3 billion deal. And this is just the beginning: GE, which has focused more on selling off assets like its majority stake in NBC Universal, recently signaled a change in focus and said it could spend $30 billion on takeovers in the next several years.

Still not convinced GE's Dresser purchase isn't just an isolated buy? Consider this: GE CEO Jeff Immelt has voiced his desire to double revenue to $15 billion in its oil and gas sector. And while GE was wrapping up its Dresser purchase it was getting rejected by another acquisition target, Wellstream, an oil services company and the world's largest maker of flexible pipes used by oil companies in deepwater. GE bid $1.2 billion for the British oilfield services company.

There's a reason GE is so interested in energy, both clean and fossil fuel based. GE Energy generated $37.1 billion in revenues last year and $6.8 billion in profits, more than one-third of GE's segment profit take.

GE may be committed to clean energy, but it also knows that oil and gas still holds lots of potential revenue. Especially in the case of Dresser, a company once owned by Halliburton (HAL) that makes gas engines used in mining, oil production and the petrochemical industry. One of Dresser's selling points is its existing base of installed equipment.

Why does that matter? Think maintenance and service, which accounts for about 40 percent of Dresser's total revenue. When a recession or even a tepid economy causes companies to stop ordering engines, GE can still rely on revenue generated from maintenance calls on dresser's existing clients. GE sees room for future expansion in this area and plans to use its global reach to accelerate sales (and add to that base of installed equipment) outside of North America, John Krenecki, vice chairman of GE and president and CEO of GE Energy said in a release.

GE's recent energy deals made in the past 10 days:

• GE formed a joint venture with Harbin Electric Machinery to make and sell wind turbines to customers in China;
• GE closed its purchase of Calnetix Power Solutions, a company that recovers waste heat from industrial processes and converts it to electricity;
• GE signed a $700 million contract with Saudi Electricity Co., for new, high-efficiency power plant in Riyahdh, Saudi Arabia.
• And earlier this summer, GE tossed $200 million into a venture-capital money pool in an innovation challenge aimed at finding breakthrough ideas in the smart grid sector.

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