January 2006

To: Fellow Baker Hughes Employees

At Baker Hughes, we are very proud of the Company's worldwide reputation for delivering high quality products and services in a manner that never compromises integrity and high standards of business conduct. Baker Hughes' quest for a high performance culture and competitive excellence begins and ends with our strong commitment to lawful and ethical conduct in everything we do. In order for Baker Hughes to thrive and grow, we must have the trust and respect of our customers, investors, employees, and the communities in which we work. This trust is gained by having universal standards of individual and collective behavior that are applied consistently in every one of the Company's activities around the world.

We must view compliance with all laws applicable to the Company's business as being the bare minimum for our operating conduct and recognize that ethics is something more. It is doing the right thing, even when no one is looking. It is this higher standard that we are committed to achieve. The success in the compliance and ethics area that we strive to achieve can only be accomplished through ownership of the Company's Core Values (Integrity, Teamwork, Performance, and Learning) by all employees and a personal commitment from each and every one of us every day to conduct the affairs of the Company in strict accordance with these values.

The Baker Hughes Business Code of Conduct serves as the Company's ethical roadmap. It is a valuable resource designed to help you understand the various issues that can arise within the Company and to guide you in making ethical decisions in light of those issues. The Code of Conduct sets forth Baker Hughes' policies in clear terms and reinforces our Core Values. But keep in mind that the Code of Conduct is only a guide. Employees of ethical companies do not engage in ethical behavior simply because they have been given a Code of Conduct. They do so because they truly want to live their Core Values and ethical behavior is part of the culture that surrounds them and influences all of their actions.

Abiding by the standards within the Code of Conduct, however, is just the first step. It is also necessary for each of us to raise any questions and report any concerns regarding the Company's failure to meet these standards. If you have a question or concern about what is proper conduct for you or anyone else, promptly raise the issue with your manager, the Chief Compliance Officer, the Legal Department, Human Resources, Corporate Security, or the Business Help Line. Nothing should compromise our commitment to integrity.

We all share the responsibility of making our Core Values a central part of our everyday business activities. In a time when a company's reputation can be easily undermined, it is imperative that you read and strictly adhere to the principles of our Code of Conduct so that the Company will maintain its outstanding reputation in the petroleum industry.