Wiley, Michael E. 1951–
Michael E. Wiley
Chairman, president, and chief executive officer, Baker Hughes
Born: 1951, in Oklahoma.
Career: Atlantic Richfield Company (ARCO), 1972–1990, domestic and international oil and gas operations, various engineering positions in planning, research and development, drilling, and production; 1991, vice president, senior vice president; ARCO Oil and Gas, 1993, president; Vastar Resources, 1993, president; 1994–1997, president, chairman, and chief executive officer; ARCO, 1997–1998, executive vice president; 1998–2000, president and chief operating officer; Baker Hughes, 2000–2004, president, chairman, and chief executive officer; 2000–, chairman and chief executive officer.
Awards: Inducted into the College of Engineering and Natural Sciences Hall of Fame, University of Tulsa, 1998.
■ Michael E. Wiley spent his entire career in the oil and gas industry, and industry analysts regarded him as one of the top two or three executives in the entire field. Because of his highly successful 28-year career with the Atlantic Richfield Company (ARCO), Wiley was chosen to head up the world's third-largest oil and gas company, Baker Hughes Incorporated (BHI) at a time when the company was experiencing a serious slump in profits. After turning the ailing company around, he announced in 2004 that he would retire in April 2005. Responding to the announcement, lead BHI director H. John Riley said: "The entire board is extremely appreciative of Mike Wiley's outstanding leadership and his significant contributions to the success of Baker Hughes" (press release, April 28, 2004).
Upon graduating from high school in 1968, Wiley entered the University of Tulsa as a student in the newly created Petroleum Engineering Undergraduate Scholarship program on a scholarship from ARCO. His summers were spent working for ARCO, one of the nation's largest oil companies, and he began full-time employment there after graduating in 1972. After serving in numerous engineering capacities in production, operation, drilling, planning, and research and development in Alaska, the continental United States, and internationally, in 1991 he became vice president and began his rise in senior management.
When ARCO created Vastar Resources in 1993—a 100 percent domestic exploration and production company with a presence in some of the most attractive oil and gas basins in the United States—Wiley became its first president. The following year he became its chairman and CEO as well. Houston-based Vastar was 82.3 percent owned by ARCO, and Wiley's direction made the fledgling company a leader in domestic exploration, production, and marketing and substantially strengthened ARCO's presence in the Gulf of Mexico. In an interview with Leslie Haines of Oil & Gas Investor, Wiley commented: "The thing that really differentiates Vastar is that it has a very focused but broad-based exploration program that is significant compared to most of its peers" (January 1996).
Wiley added that the cornerstones of his strategy were, first, to be a low-cost full-cycle company in all respects, from exploration to marketing. He said Vastar's cash-cost structure was as good as any in its peer group, and at startup their expenses were even lower than they had expected. Second, focused and disciplined exploration coupled with aggressive exploitation would drive internal growth. Apart from 5 percent "seed money" slated for expansion into new areas and technologies, 95 percent of their efforts would be concentrated on their regional focus areas—the rich fields in the Gulf of Mexico, the Gulf Coast, the San Juan Basin in New Mexico, and the Mid-continent Region extending from the Texas Panhandle into Michigan. His third strategy was value-added marketing: they were already a top producer-marketer in the United States, marketing nationally and selling more than two billion cubic feet daily. His fourth strategy was to keep the company financially strong and flexible. This would be achieved, he said, by keeping the balance sheet solid and by funding operations with internally generated cash.
FOCUS AND EXPERTISE LEADS TO THE TOP
In 1998 ARCO was the seventh-largest oil company in the United States and employed 20,000 people globally. On September 30 of that year, following an internal memo announcing planned budget cuts and layoffs to offset decreased oil prices globally and increased competition from larger companies, ARCO undertook a major management shake-up. Two top executives, including president William Wade, retired suddenly. Wiley was chosen to replace Wade and fill a newly created position as COO. ARCO chairman Mike Bowlin commented that the changes would help the company execute its core strategies, one of which was to focus on businesses in which they could maintain a leadership position in the industry.
In May 2000 ARCO was acquired by BP Amoco, and thus ended Wiley's association with the company. Two months later, however, he was chosen by BHI, the world's third-largest oil-service company by market capitalization, to become president, chairman, and CEO. The position became vacant following the resignation of Max L. Lukens, under whose stewardship accounting blunders had caused the company to restate earnings. Industry analysts applauded the appointment, and James K. Wicklund of Dain Rauscher Wessels in Dallas summed up the enthusiasm: "We believe it will be very well received by investors, due to his CEO experience with a large, public oil and gas company and extensive oil field operating experience. Wiley is highly respected for his leadership ability and is considered one of the top two or three executives in the oil and gas industry" (Hart's Petroleum Finance Week, July 24, 2000).
STRONG LEADERSHIP FOR A LANGUISHING COMPANY
BHI, based in Houston, Texas, was a global provider of petroleum products and services. Apart from manufacturing well-drilling equipment, submersible oil pumps, and equipment to maintain oil and gas wells, it specialized in oil discovery and recovery, tested potential well sites, and drilled and operated wells. It also manufactured specialty chemicals for petroleum and wastewater-treatment industries. Its Oilfield segment alone was comprised of six operating divisions: Baker Atlas, providing down-hole well logging and services; Baker Oil Tools, providing down-hole completion, fishing equipment, and services; Baker Petrolite, providing specialty chemicals such as drilling fluids and stimulation additives; Centrilift, specializing in electric submersible pumps; Hughes Christensen, manufacturer of drill bits; and INTEQ, providing drilling and evaluation services.
BHI was languishing in several areas, however, and Wiley's assignment was to turn the company around. Retired Marathon Oil chairman Victor G. Beghini, who led the search committee for BHI, commented that Wiley was "a strong leader and a tough-minded businessman, with hands-on technical and operating knowledge of the oil field. At Vastar, he demonstrated that he could mobilize people, assets, and technology to achieve change, growth, and solid profitability. Mike clearly has the qualities we are looking for in our CEO search" (Hart's Petroleum Finance Week, July 24, 2000). A BHI press release quoted Wiley as saying: "I have long respected the products and services of Baker Hughes. I am looking forward to working closely with our employees, customers, and stockholders as we become the premier performer in our industry" (July 19, 2000).
In reporting his interview with Wiley for Oil & Gas Investor, Bill Pike wrote: "Michael E. Wiley … brings enthusiasm—and the fresh viewpoint of a former customer—to the task of reversing the fortunes of BHI…. A veteran executive from the exploration and production sector crosses over to inject new life into Baker Hughes Inc." Pike noted that confidence in Wiley's leadership was so high that, of 25 industry analysts, 12 rated BHI's stock a strong buy while another 12 rated it a buy. He quoted analyst Wicklund as commenting: "During [Wiley's] tenure at Vastar Resources, the company had the lowest finding costs in the Gulf of Mexico for four consecutive years." Wicklund felt that, while BHI still had "issues," they were now being addressed far more effectively and directly than many analysts had previously anticipated. Meanwhile, according to Pike, an analyst for A. G. Edwards & Sons said that the "weakness in stock price created a good opportunity to by a company that has become the purest play in the oilfield-service business and is finally on the right track" (May 2001). Just nine months after Wiley joined BHI, the company's debt of $2.9 billion in 1999 had been reduced and the target for the end of 2001 was set at $1.9 billion. That target was attained.
When asked by Pike how his management style affected BHI's turnaround, Wiley responded: "I do not believe there is any one formula or methodology for management and leadership. I think each industry, each business has its own set of issues and opportunities. You have to be flexible…. The key is to build a culture of performance that creates value over a long period of time." He also said he felt sure the industry had not seen the end of fluctuating economic cycles, and that those inevitable cycles needed to be managed in a manner that attracts, maintains, and motivates the workforce: "That is a big one," he said.
On April 28, 2004, Wiley announced to the BHI board that he would not seek reelection as its chairman when his term expired in April 2005, nor would he remain on as CEO. In a BHI press release, he said: "I will be nearing the end of five years as the leader of Baker Hughes. We have accomplished essentially all of the major objectives I set … and I am very proud to have shared this success with our outstanding employees and management team…. As a Best-in-Class leader in the oilfield services industry, Baker Hughes is well positioned for the future." H. John Riley, BHI's lead director, commented: "[Wiley] has implemented a strategy for growth and improved performance that has reenergized the Company. We are grateful to Mike for his dedicated efforts on behalf of the Company and look forward to working with him through out the year on the succession process" (press release, April 28, 2004).
See also entries on Atlantic Richfield Company and Baker Hughes Incorporated in International Directory of Company Histories.
sources for further information
"ARCO's Former President Will Take the Helm of Baker Hughes in August," Hart's Petroleum Finance Week, July 24, 2000, p. 1.
"Baker Hughes Announces Results of Annual Stockholders Meeting and Succession Plans, " press release, April 28, 2004, http://biz.yahoo.com/prnews/040428/daw080_1.html.
"Baker Hughes Names Michael E. Wiley New CEO," press release, July 19, 2000, http://nocache.corporate-ir.net/ireye/ir_site.zhtml?ticker=BHI&script=460&layout=-6&item_id=105509.
Haines, Leslie, "From the Driver's Seat," Oil & Gas Investor, January 1996, p. 2.
Pike, Bill, "New Boss at BHI," Oil & Gas Investor, May 2001, p. 41.