Energy is General Electric's Next Great Frontier

Industrial behemoth General Electric is a company normally associated with light bulbs, appliances, and jet engines. It's one of the largest industrial conglomerates in the world, and yet, it's isn't resting on its laurels. Far from it—in fact, GE is slowly building out its energy business, which represents its next frontier industry.

While GE's industrial segments continue to be its flagship businesses that garner most of the attention from the analyst community and the financial media, underneath the surface lies a booming energy business. Future growth is extremely likely, due to continuing partnerships like a recently announced strategic venture with energy juggernaut Chevron . Read on to discover why energy is quickly becoming a multi-billion dollar business for GE.

Providing complex solutions across the oil and gas industry
General Electric has formed a number of partnerships and acquisitions within its emerging energy business, which is rapidly gaining prominence among the company's many business segments. GE's oil and gas segment is now a nearly $17 billion business by annual revenue. The segment was its fastest-growing business last year and is now the company's fourth-largest by revenue and profit. GE's oil and gas division grew revenue by 11% last year, which far outpaced its other businesses. In all, GE posted revenue growth of less than 1% in 2013.

Looking back even further reveals a booming business that's quietly growing like a weed. Orders in GE's oil and gas segment rose from less than $1 billion in 1994 to nearly $20 billion today. More recently, its profits grew at 16% annually over the past three years.

The success of GE's energy business is due to the strategic partnerships formed to solve the world's complex and constantly evolving energy needs. For example, GE recently announced it will partner with the Chevron's energy technology division to create the Chevron-GE Technology Alliance. This joint undertaking will develop new collaborations in areas such as flow-analysis technology. Going forward, Chevron will apply a GE flow meter to its land-based well production lines in the western United States.

Another major theme in the energy world right now is the use of liquefied natural gas as fuel for locomotives. GE and CSX Corp. announced a partnership last year to pursue this idea. GE's NextFuel kits will allow rail freight operators to use liquefied natural gas, which is more environmentally friendly than coal and results in lower costs as well. CSX plans to begin using this technology later this year.

Earlier this year, GE acquired the reciprocating compression division from Cameron International for $550 million. That division provides compression equipment for oil and gas production, gas processing, and distribution, and generated $355 million in sales in 2012. Continued bolt-on acquisitions like this will supplement GE's growing oil and gas business.

Solid underlying growth in oil and gas is evident in GE's massive backlog for oil and gas projects. At the end of 2013, the total backlog for oil and gas equipment and services stood at nearly $18 billion, representing a 27% increase compared to the end of the prior year. Clearly, demand for GE's oil and gas equipment and services is strong.

The Foolish bottom line
GE is already a huge business, with a presence in dozens of countries across the world and several operating segments that collectively generated $147 billion in revenue last year. With this in mind, it might seem difficult for a company of this massive size to find new revenue streams that meaningfully move the needle. However, GE is doing just that in its oil and gas segment, which is becoming more important to GE with every passing year.

That's because GE is teaming up with some of the biggest energy companies in the world like Chevron to solve increasingly challenging issues. It's pursuing acquisitions, growing organically, and is poised for future growth thanks to its impressive backlog. Put simply, GE is quickly becoming an energy giant.

Why exactly is GE so interested in growing its energy business?

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The article Energy is General Electric's Next Great Frontier originally appeared on Fool.com.

Bob Ciura has no position in any stocks mentioned. The Motley Fool recommends Chevron. The Motley Fool owns shares of CSX and General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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